78. You have been assigned to compute the income tax provision for Tulip City Flowers Inc. (TCF) as of December 31, 2019. The company’s income statement for 2018 is provided below:

Tulip City Flowers Inc. Statement of Operations at December 31, 2019 Net sales $20,000,000 Cost of sales 12,000,000 Gross profit $ 8,000,000 Compensation $ 500,000 Selling expenses 750,000 Depreciation and amortization 1,250,000 Other expenses 1,000,000 Total operating expenses $ 3,500,000 Income from operations $ 4,500,000 Interest and other income 25,000 Income before income taxes $ 4,525,000 You identified the following permanent differences:

Interest income from municipal bonds $10,000 Nondeductible stock compensation 5,000 Nondeductible fines 1,000 TCF prepared the following schedule of temporary differences from the beginning of the year to the end of the year:

Tulip City Flowers Inc. Temporary Differences Scheduling Template Taxable Temporary Differences BOY Deferred Taxes Current Year Change EOY Cumulative T/D EOY Deferred Taxes Accumulated depreciation $(1,050,000) $(500,000) $(5,500,000) $(1,155,000)

Deductible Temporary Differences BOY Deferred Taxes Current Year Change EOY Cumulative T/D EOY Deferred Taxes Allowance for bad debts $ 21,000 $ 10,000 $110,000 $ 23,100 Prepaid income 0 20,000 20,000 4,200 Deferred compensation 10,500 10,000 60,000 12,600 Tulip City Flowers Inc. Temporary Differences Scheduling Template Taxable Temporary Differences BOY Deferred Taxes Current Year Change EOY Cumulative T/D EOY Deferred Taxes Accrued pension liabilities 105,000 100,000 600,000 126,000 Total $136,500 $140,000 $790,000 $165,900 Required:

a. Compute TCF’s current income tax expense or benefit for 2019.

b. Compute TCF’s deferred income tax expense or benefit for 2019.

c. Prepare a reconciliation of TCF’s total income tax provision with its hypothetical income tax expense of 21 percent in both dollars and rates.