Farmer Inc. began business on January 1, 2010. Its pretax financial income for the first 2 years was as follows: 2010 $240,000 2011 560,000 The following items caused the only differences between pretax financial income and taxable income. In 2010, the company collected $180,000 of rent; of this amount, $60,000 was earned in 2010; the other $120,000 will be earned equally over the 2011-2012 period. The full $180,000 was included in taxable income in 2010. The company pays $10,000 a year for life insurance on officers. In 2011, the company terminated a top executive and agreed to $90,000 of severance pay. The amount will be paid $30,000 per year for 2011-2013. The 2011 payment was made. The $90,000 was expensed in 2011. For tax purposes, the severance pay is deductible as it is paid. The enacted tax rates existing at December 31, 2010 are: 2010 30% 1212 40% 2011 35% 1213 40% Instructions: Determine taxable income for 2010 and 2011. Determine the deferred income taxes at the end of 2010, and prepare the journal entry to record income taxes for 2010. Prepare a schedule of future taxable and (deductible) amounts at the end of 2011. Prepare a schedule of the deferred tax (asset) and liability at the end of 2011. Compute the net deferred tax expense (benefit) for 2011. Prepare the journal entry to record income taxes for 2011. Show how the deferred income taxes should be reported on the balance sheet at December 31, 2011.