The accounting records of Sweet Inc. show the following data for 2020 (its first year of operations). 1. Life insurance expense on officers was $9,500. 2. Equipment was acquired in early January for $307,000. Straight-line depreciation over a 5-year life is used, with no salvage value. For tax purposes, Sweet used a 30% rate to calculate depreciation. 3. Interest revenue on State of New York bonds totaled $3,700. 4. Product warranties were estimated to be $50,900 in 2020. Actual repair and labor costs related to the warranties in 2020 were $11,000. The remainder is estimated to be paid evenly in 2021 and 2022. 5. Gross profit on an accrual basis was $96,000. For tax purposes, $80,600 was recorded on the installment-sales method. 6. Fines incurred for pollution violations were $4,100. 7. Pretax financial income was $739,300. The tax rate is 30%. Prepare a schedule starting with pretax financial income in 2020 and ending with taxable income in 2020. Schedule of Pretax Financial Income and Taxable Income for 2020 Pretax financial income $ Permanent differences Temporary differences Taxable income
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