QUESTION $13$

$($Show ALL your work and round all numbers to the nearest dollar$).$

Wise Company began operations at the beginning of $2023.$ The following information pertains to this company.

Pretax accounting $($financial$)$ income for $2023$ is $$100,000.$

Differences between the $2023$ accounting income and tax income are listed below:

a$.$ Warranty expense accrued for accounting income is $$7,000.$ Warranty deductions allowed for tax income is $$2,000.$

b$.$ Gross profit on construction contracts using the percentage$-$of$-$completion method for accounting income is $$92,000.$ Gross profit on construction contracts for tax income is $$67,000.$

c$.$ Depreciation of property, plant, and equipment for accounting income is $$60,000.$ Depreciation of these assets amounts to $$80,000$ for the tax income.

d$.$ A $$3,500$ fine paid for violation of pollution laws was deducted in computing pretax financial income.

e$.$ Interest revenue recognized in accounting income on an investment in tax$-$exempt municipal bonds is $$1,500.$

Required:

a$.$ Compute taxable income for $2023.$

b$.$ Prepare the journal entry to record income tax expense for $2023$