A)	2017 EBIT is	$300,000
	Here are the differences between book and tax income for 2017
			Book	Tax
Warranty Expense			8,000	3,000
Gross Profit recognized on long-term contracts			95,000	70,000
Depreciation expense			50,000	70,000
Pollution fine paid			3,000
Tax exempt Interest Income			2,000
REQUIRED:
Compute taxable income
Compute deferred taxes for each temporary difference
Prepare the journal entry to record tax expense for 2017
Draft the lower portion of the 2017 income statement starting with EBIT
B)	2018	$320,000
	Here are the differences between book and tax income for 2018
			Book	Tax
Warranty Expense			5,000	7,000
Gross Profit recognized on long-term contracts			80,000	70,000
Depreciation expense			60,000	80,000
Tax exempt Interest Income			2,500
REQUIRED:
Compute taxable income
Compute deferred taxes for each temporary difference
Prepare the journal entry to record tax expense for 2018
Draft the lower portion of the 2018 income statement starting with EBIT
C)
Assume the tax rate changed to 30% in June of 2018 (for current and all future years)
REQUIRED
Compute taxable income
Compute deferred taxes for each temporary difference
Prepare the journal entry to record tax expense for 2018
Draft the lower portion of the 2018 income statement starting with EBIT