Answer:
The taxable income for 2019 is $276,000.
Explanation:
(a) Calculation of taxable income for 2019:
Pretax financial income $302,100
Less: Excess of tax depreciation over book depreciation ($43,800)
Add: Rent received in advance $18,100
Taxable income for 2019 $276,400
(b) Journal entries for 2019: Debit ($) Credit ($)
Income tax expense ($302,100 x 20%) 60,420
Deferred tax asset ($18,100 x 20%) 3,620
Deferred tax liability ($43,800 x 20%) 8,760
Income tax payable ($276,400 x 20%) 56,800
<em>Recording of income tax expense, deferred income taxes, and income taxes payable for 2019.</em>
(c) Journal entries for 2020:
Income tax expense (65,000 + 3,620 - 2,190) 66,430
Deferred tax asset ($43,800 x 20% / 4) 2,190
Deferred tax liability ($18,100 x 20%) 3,620
Income tax payable ($325,000 x 20%) 65,000
<em>Recording of income tax expense, deferred income taxes, and income taxes payable for 2020.</em>
