YourCompany began operations in $2023.$ The income tax rate is $20\%$ for all years.

On December $31,2023,$ the Deferred Tax Asset account has a balance of $$3600$ caused by:

The difference between book warranty expense of $$20,000$ and warranty claims paid of $$10,000$

shown as a deduction on the tax return, and

A customer deposit of $$8,000$ which was recorded as unearned revenue $($liability$)$ on the books,

and shown as taxable income on the tax return.

The Deferred Tax Liability account on $\frac{12}{31}\frac{?}{23}$ has a balance of $$8,000$ caused by the excess of tax over

book depreciation $($ $$70,000$ on the tax return versus $$30,000$ on the USGAAP financial statements$).$

The following items relate to $2024$ activity:

Financial accounting depreciation expense is $$30,000$ and accelerated tax depreciation is

$$80,000.$

Interest revenue on tax exempt municipal bonds amounts to $$100,000.$

Warranty expense related to $2024$ sales is $$30,000.$ Cash expenditures related to warranty

repairs made in $2024$ amounted to $$32,000.$ Warranty expenditures are tax deductible in the

year they are paid.

YourCompany performed the work related to the $$8,000$ customer deposit received in $2023$ and

recognized revenue in $2024.$

In $2024$ YourCompany expensed a non$-$deductible fine to the EPA in the amount of $$10,000,$

which was also paid in $2024.$

Pre$-$tax financial accounting income is $$900,000.$

Required:

Reconcile pre$-$tax financial accounting income to taxable income for $2024.$ If you show the

warranty item on two lines, all lines are used. If you net the warranty item onto one line, one

line is NOT used. $(6\mathrm{.}5$ points total$)$YourCompany began operations in $2023.$ The income tax rate is $20\%$ for all years.

On December $31,2023,$ the Deferred Tax Asset account has a balance of $$3600$ caused by:

The difference between book warranty expense of $$20,000$ and warranty claims paid of $$10,000$

shown as a deduction on the tax return, and

A customer deposit of $$8,000$ which was recorded as unearned revenue $($liability$)$ on the books,

and shown as taxable income on the tax return.

The Deferred Tax Liability account on $\frac{12}{31}\frac{?}{23}$ has a balance of $$8,000$ caused by the excess of tax over

book depreciation $($ $$70,000$ on the tax return versus $$30,000$ on the USGAAP financial statements$).$

The following items relate to $2024$ activity:

Financial accounting depreciation expense is $$30,000$ and accelerated tax depreciation is

$$80,000.$

Interest revenue on tax exempt municipal bonds amounts to $$100,000.$

Warranty expense related to $2024$ sales is $$30,000.$ Cash expenditures related to warranty

repairs made in $2024$ amounted to $$32,000.$ Warranty expenditures are tax deductible in the

year they are paid.

YourCompany performed the work related to the $$8,000$ customer deposit received in $2023$ and

recognized revenue in $2024.$

In $2024$ YourCompany expensed a non$-$deductible fine to the EPA in the amount of $$10,000,$

which was also paid in $2024.$

Pre$-$tax financial accounting income is $$900,000.$

Required:

Reconcile pre$-$tax financial accounting income to taxable income for $2024.$ If you show the

warranty item on two lines, all lines are used. If you net the warranty item onto one line, one

line is NOT used. $(6\mathrm{.}5$ points total$)$