You have been assigned to compute the income tax provision for Motown Memories Inc. (MM) as of December 31, 2019. The company’s income statement for 2019 is provided below:

MM prepared the following schedule of temporary differences from the beginning of the year to the end of the year:

Required:

a. Compute MM’s current income tax expense or benefit for 2019.

b. Compute MM’s deferred income tax expense or benefit for 2019.

c. Prepare a reconciliation of MM’s total income tax provision with its hypothetical income tax expense of 21% in both dollars and rates

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Motown Memories Inc. Statement of Operations at December 31, Net sales Cost of sales Gross profit 2019 $50,000,000 28,000,000 Compensation Selling expenses Depreciation and amortization Other expenses Total operating expenses Income from operations Interest and other income Income before income taxes $22,000,000 $ 2,000,000 1,500,000 4,000,000 500,000 $ 8,000,000 $14,000,000 1,000,000 $15,000,000