Problem $3-21($L$0.1,4)$

Mini, Inc., earns pretax book net income of $$750,000$ in $2022,$ its first year of operations. Mini recognized $$20,000$ in bad debt expense for

book purposes. This expense is not yet deductible for tax purposes.

Mini reports $$800,000$ of pretax book net income in $2023.$ Mini did not recognize any bad debt expense for book purposes in $2023$ but did

deduct $$15,000$ in bad debt expense for tax purposes. Mini reports no other temporary or permanent book$-$tax differences. The applicable

U$.$S$.$ Federal corporate income tax rate is $21\%,$ and Mini earns an after$-$tax rate of return on capital of $4\%.$

Enter below the $2023$ end$-$of$-$year balance in Mini's $2023$ deferred tax assets and liabilities, deferred tax benefit or expense, and total tax

benefit or expense.

If an amount is zero, enter $"0".$ If required, round your answers to the nearest dollar.

$2023$

a$.$ Total tax benefit or expense

b$.$ Deferred tax benefit or expense

c$.$ In net present value terms, what has been the cost to Mini of the deferred tax deduction for bad debts? The present value factor at $8\%$

is $0\mathrm{.}9615.$

a$.$ $$168,000$

b$.$ $$3,150$

c$.$ $$121$

c$.$ $$15000*21\%=$$$3150>$ $$3150*0\mathrm{.}9615=$$$3029>$ $$3150-$$$3029=$ $$121$