Problem $16-8($Algo$)$ Multiple differences; taxable income given; two years; change in tax rate; financial statement effects $[$LO$16-1,16-2,16-3,16-5,16-6,16-8]$

$[$The following information applies to the questions displayed below.$]$

Arndt, Incorporated reported the following for $2024$ and $2025($$ in millions$)$:

$\backslash$table$[[,,2024,2025],[$Revenues$,,,938,$$$,1,030],[$Expenses$,,,794,,850],[$Pretax accounting income $($income$,$statement$),,144,,$$ $180],[$Tax rate: $25\%,,,106,,$$ $214]]$

Tax rate: $25\%$

a$.$ Expenses each year include $$56$ million from a two$-$year casualty insurance policy purchased in $2024$ for $$112$ million. The cost is tax deductible in $2024.$

b$.$ Expenses include $$2$ million insurance premiums each year for life insurance on key executives.

c$.$ Arndt sells one$-$year subscriptions to a weekly journal. Subscription sales collected and taxable in $2024$ and $2025$ were $$57$ million and $$73$ million, respectively. Subscriptions included in $2024$ and $2025$ financial reporting revenues were $$51$ million $($ $$34$ million collected in $2023$ but not recognized as revenue until $2024)$ and $$57$ million, respectively. Hint. View this as two temporary differences$-$one reversing in $2024$; one originating in $2024.$

d$.2024$ expenses included a $$40$ million unrealized loss from reducing investments $($classified as trading securities$)$ to fair value. The investments were sold and the loss realized in $2025.$

e$.$ During $2023,$ accounting income included an estimated loss of $$30$ million from having accrued a loss contingency. The loss was paid in $2024,$ at which time it is tax deductible.

f$.$ At January $1,2024,$ Arndt had a deferred tax asset of $$16$ million and no deferred tax liability.

Problem $16-8$ Part $2$

$2.$ Prepare a schedule that reconciles the difference between pretax accounting income and taxable income. Using the schedule, prepare the necessary journal entry to record income taxes for $2024.$

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