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You have been assigned to compute the income tax provision for Tulip City Flowers Inc. (TCF) as of December 31, 2018. The companys Income Statement for 2018 is provided below:

Tulip City Flowers Inc.
Statement of Operations at December 31, 2018
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 Difference Scheduling Template
Taxable Temporary Differences	BOY Cumulative T/D		Beginning Deferred Taxes (@ 21%)		Current Year Change		EOY Cumulative T/D		Ending Deferred Taxes (@ 21%)
Accumulated depreciation	(5,000,000)		(1,050,000)		(500,000)		(5,500,000)		(1,155,000)
Deductible Temporary Differences	BOY Cumulative T/D		Beginning Deferred Taxes (@ 21%)		Current Year Change		EOY Cumulative T/D		Ending Deferred Taxes (@ 21%)
Allowance for bad debts	$100,000		$21,000		$10,000		$110,000		$23,100
Prepaid income	0		0		20,000		20,000		4,200
Deferred compensation	50,000		10,500		10,000		60,000		12,600
Accrued pension liabilities	500,000		105,000		100,000		600,000		126,000
Total	$650,000		$136,500		$140,000		$790,000		$165,900

Required:

1. Compute TCFs current income tax expense or benefit for 2018.
2. Compute TCFs total income tax provision for 2018.
3. Prepare a reconciliation of TCFs total income tax provision with its hypothetical income tax expense of 21% in both dollars and rates.

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