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Unformatted text preview: 2,100 c Income Taxes Payable 15,000 a Deferred Tax Liability (install. sales) 3,300 d a $50,000 x 0.30 b ($33,800 x 0.30) - $12,540; decrease in deferred tax liability c ($56,500 x 0.30) - $14,850 d ($26,700 x 0.30) - $4,710 e $15,000 + $3,300 - $2,400 - $2,100 3. The permanent differences are the nondeductible officers’ life insurance premium expense, nontaxable interest on municipal bonds, and percentage depletion in excess of cost depletion. These differences are not accounted for in the journal entry in Requirement 2 as deferred tax items because they will never reverse (i.e., pretax financial income and taxable income will always be different for permanent differences)....
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