PLEASE SHOW ALL WORK!!!

PLEASE SHOW ALL WORK!!

Part 1 Explain whether each of the following independent situations should be treated as a reversible difference or a permanent difference. a) For accounting purposes, Dolphins Corp. reports revenue from instalment sales on an accrual basis. For income tax purposes it reports the revenues by the instalment method deferring recognition of gross profit until cash is collected. (1 mark) b) Pre-tax accounting income and taxable income differ because dividends received from Canadian corporations were not included in Rye Corp.'s taxable income, while 100% of the dividends received were included as revenue for financial statement purposes. (1 mark) c) Flax Corp.'s estimated warranty costs (covering three years) are expensed for accounting purposes at the time of sale but deducted for income tax purposes only when paid. (1 mark) Part 2 The records for Patriots Inc. show the following data for calendar 2020: 1. Gross profit on instalment sales recorded on the books was $ 100,000. Collections from the instalment receivables for the year were $ 50,000. 2. Golf club dues were $ 4.000. 3. Machinery was acquired in January 2020 for $ 300,000. Patriots use straight-line depreciation over a ten-year life (no residual value). For tax purposes, CCA allowed is $42.000, ignoring the half-year rule. 4. Dividends received from a Canadian corporation were $ 3.800. 5. The estimated warranty liability related to 2020 sales was $ 19.600. Warranty repair costs paid during 2020 were $ 13,600. The remainder will be paid in 2021. 6. Pre-tax accounting income is $ 240,000. The enacted income tax rate is 26.5%. Instructions a) Prepare a schedule (starting with pre-tax accounting income) to calculate taxable income. (7 marks) b) Prepare the required adjusting journal entries to record income taxes for 2020. (6 marks)