Listed below are seven independent situations. For each situation indicate (by letter) whether it will create (A) a deferred tax asset, (L) a deferred tax liability, or (N) neither. Provide rational for your answer if you can. SITUATION1. Research and development costs reported in the income statement but elected to be capitalized and amortized over five years for tax purposes.2. An operating loss carry-forward.3. Premiums paid on life insurance policies covering key corporate executives, if the corporation wants the life insurance proceeds to be non-taxable.4. Warranty expense that is tax deductible when paid.5. Interest earned on investments in municipal bonds.6. Current year charitable contributions not currently deductible due to tax limitations but which can be carried forward to future tax years.7. Prepaid expenses, tax deductible when paid.8. Organization costs reported in the income statement but amortized and deducted over five years for tax purposes.9. The nondeductible portion of travel and entertainment expenses10. Prepaid expenses, tax deductible when paid.

The ledger of laurie rental agency on march 31 of the current year includes the following selected accounts before adjusting entries have been prepared. debit credit prepaid insurance $ 5,400 supplies $ 4,500 equipment 40,000 accumulated depreciation—equipment $12,600 notes payable 25,000 unearned rent revenue 11,100 rent revenue 90,000 interest expense –0– salaries and wages expense 20,000 an analysis of the accounts shows the following. 1. the equipment depreciates $600 per month. 2. two-thirds of the unearned rent revenue was earned during the quarter. 3. the note payable is dated january 1 and bears 12% interest. 4. supplies on hand total $800. 5. the insurance policy is a two-year policy dated january 1. instructions: a. prepare the adjusting entries at march 31, assuming that adjusting entries are made quarterly. additional accounts are: depreciation expense, insurance expense, interest payable, and supplies expense. b. compute the ending balances for prepaid insurance, unearned rent revenue, and rent revenue, and indicate in which financial statement those items will be reported.