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Bonus Corporation was formed in $2002.$ It is based in Tennessee and operates throughout the US southeast. The company controls over $$800$ million in productive assets, most of which are located in Tennessee.Bonus provides mined minerals used extensively in steel production, but also in other industrial applications. Their industry is concentrated among $5-10$ major competitors, most of which are located outside of the US$.$ Bonus has used its favorable location and specific intellectual property assets to be profitable in most years, though there were a few years when the sector contracted and Bonus incurred large operating losses. The most recent loss year was $2021.$Bonus' senior leadership has tried to deal with legacy costs related to past environmental practices. They expect local and federal fines and penalties to be levied over the next $3-5$ years. This means it expects to show book and tax losses during that time, after which regular profitability will return.Bonus' financial statements are prepared in accordance with US GAAP, and its lenders utilize these statements in monitoring the company. Bonus has a tax department of $17$ and has a robust internal audit function. Bonus uses your firm for its outside tax work, most of which is multijurisdictional tax planning, including the income tax return that it files with the US federal government, $11$ states, and $3$ cities.Bonus' statutory tax rates are $21$ percent federal and an average state rate of $5$ percent. Federal income taxes are not deductible in any of the states in which Bonus operates, but state income taxes are a proper federal tax deduction. Because of the deductibility of state taxes for federal, the combined tax rate paid by Bonus is $24\mathrm{.}95\%.(5\%$ state rate $+(1-0\mathrm{.}05)*21\%$federal rate $=24\mathrm{.}95\%).$ All of the states with which Bonus files income taxreturns define taxable income in the same way. Using estimated payments, Bonus pays in full its federal and state income tax liabilities in the book and tax year in which net income occurs.Bonus has no foreign$-$source income or deductions. No tax rate changes have been enacted that will apply in future years. Bonus does not record a valuation allowance against its deferred tax assets in the current reporting period.Bonus holds only one carryforward to this tax year, for a state and federal NOL. Every year, there also is an amount for book cost of goods sold that are added to the UNICAP balance.Your TaskYour task is to convert the trial balance into a worksheet that calculates both the current state and federal tax payable, and the total tax provision for Bonus. To do this you will utilize the book trial balance that is presented below. Bonus CorporationCondensed Trial Balance $($in $ million$)$Year Ending $12/31/23$RevenuesSalesCOGSGross ProfitExpensesAddition to bad debt reservesAdvertisingDepreciationFines paidLegal and accounting servicesMeals $($in full$)$Salaries$,$ Wages, Benefits Taxes $-$ Sales, Property, Etc.UtilitiesEmployee vacation accruedTotal ExpensesBook Net Income $($Pre$-$Tax$)4,9002,700507095551756075011040902,200$Note: Specific accounts written off amounted to $20$Note: Includes lobying costs of $5$MACRS would have allowed $135$Note: Vacation time used of $751,495705$Additional Notes:Federal and State NOL carryover from $2021$ of $$75$ million.Book cost of goods sold that would be added to inventory for UNICAP purposes of $$190$ million.Step $1$Identify the book$-$tax differences apparent from Bonus' trial balance. Classify each as a permanent or temporary book$-$tax difference. A few entries have been made to start.ItemHas NoBook$-$Tax DifferencePermanentBook$-$Tax DifferenceTemporaryBook$-$TaxDifferenceAdvertising CostsXDepreciationXFines and PenaltiesXLobbying ExpensesBad Debt ExpenseLegal & AccountingMealsSalaries $/$ Wages $/$ BenefitsTax NOL CarryforwardTaxes PaidUNICAP AdjustmentUtilities ExpStep $2$Use the trial balance data to create Bonus' tax expense provision for $2023$ by completing the table below. First, determine the current tax payable amount. $($You will need b$$th a state and federal tax payable amount.$)$ Then add the deferred tax items allowing a total tax provision to be calculated.You can follow the structure provided below. Use the classifications of book$-$tax differences from Step $1$ to make your computation.Bonus CorporationProvision for Income Tax CalculationTax Year $2023$Temp.Diff.ItemPre$-$Tax Net IncomeAmount$705$Book$-$tax differences, current tax payableUNICAPNOL CarryforwardBad DebtsDepreciation$190190($add more as needed$)$State Taxable IncomeState Tax PayableFederal Taxable IncomeFederal Tax PayableCurrent Tax Payable $($Sum of State and Federal TaxPayables$)$Deferred Tax ExpenseTotal TemporaryDifferencesTimes combined state$/$fed tax rate$=$Addition to net deffered tax assetsum here of above$24\mathrm{.}95\%$Total tax provisionPerm.Diff. NotesLine ALine B $=$ A $*5\%$Line C $=$ A $-$ BLine D $=$ C $*21\%$Line E $=$ B $+$ DLine FLines E $+$ FStep $3$Now, construct a journal entry to record the results from Part $2.$ Use the two tables below to construct the amounts you'll need for the DTA and DTL lines in the journal entry. Then complete the journal entry at the bottom of the page.Deferred Tax AssetUNICAP AdjustmentDisallowed Allowance for Vacation Disallowed Allowance for Bad DebtTotal AdjustmentsTimes Combined Fed$/$State Rate $=$ Change in the account$24\mathrm{.}95\%$Deferred Tax LiabilityNOL Carryover Used this YearCost Recovery DifferencesTotal AdjustmentsTimes Combined Fed$/$State Rate $=$ Change in the account$24\mathrm{.}95\%$Income Tax ExpenseDeferred Tax AssetIncome Tax PayableDeferred Tax Liability????????????

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