Reference no: EM133119559

Question - Tynthia Manufacturing Corporation reported pre-tax book income of $3,050,000 for the current year, and is in a 35% tax bracket.

The change in the difference in the basis of plant assets for the year is $410,000. The book basis is higher than the tax basis, suggesting that the firm is using accelerated depreciation methods for tax purposes and the straight-line method for book purposes.

Of Tynthia's pre-tax book income, $14,000 is nontaxable income from municipal bonds.

At the beginning of the current year, Tynthia's estimated warranty liability had a balance of $66,000. Actual repairs cost $54,000, and the company accrued an additional $70,000 for the current year.

Tynthia paid fines of $120,000 to the federal government for not complying with relevant regulations. The fines were included in pre-tax book income.

Required -

A. Calculate the permanent differences for the year.

B. Calculate the book income tax expense for the year.

C. Calculate any deferred tax assets and/or deferred tax liabilities for the year.

D. Calculate the income tax payable for the year.

E. Prepare the journal entry required to record the tax expense for the current year assuming a 35% income tax rate.