P19-9 (L01,2,4) GROUPwORK (Five Differences, Compute Taxab ment) Wise Company began operations at the beginning of 2018. The following information pertains to this company le Income and Deferred Taxes, Draft Income State- 1. Pretax financial income for 2018 is $100,000. 2. The tax rate enacted for 2018 and future years is 40%. 3. Differences between the 2018 income statement and tax return are listed below: (a) Warranty expense accrued for financial reporting purposes amounts to $7,000. Warranty deductions per the tax return amount to $2,000 (b) Gross profit on construction contracts using the percentage-of-completion method per books amounts to $92,000. Gross profit on construction contracts for tax purposes amounts to $67,000. (c) Depreciation of property, plant, and equipment for financial reporting purposes amounts to $60,000. Depreciation of these assets amounts to $80,000 for the tax return. (d) A S3,500 fine paid for violation of pollution laws was deducted in computing pretax financial income (e) Interest revenue recognized on an investment in tax-exempt municipal bonds amounts to $1,500 Taxable income is expected for the next few years. (Assume (a) is short nature.) 4. -term in nature; assume (b) and (c) are long-term in