P18-16. Permanent and temporary differences (L.O. 18-2) (Medium - 20 minutes) The following data represent the differences between accounting and tax income for Orin tal Imports Inc., whose pre-tax accounting income is $860,000 for the year ended Decem 31. The company's income tax rate is 40%. Additional information relevant to income taxes includes the following: Capital cost allowance of $202,500 exceeded accounting depreciation expense of $100.000 in the current year. Rents of $5,000, applicable to next year, had been collected in December and deferred for financial statement purposes but are taxable in the year received. In a previous year, the company established a provision for product warranty expense A summary of the current year's transactions appears below: Provision for warranties, January 1 balance $ 96,300 Provision for the year 35,600 Payments made to fulfill product warranties (26,000 Provision for warranties, December 31 balance $105,900 For tax purposes, only actual amounts paid for warranties are deductible. Insurance expense to cover the company's executive officers was $5,200 for the year, and you have determined that this expense is not deductible for tax purposes