Starfleet Corporation has one temporary difference at the end of 2021 that will reverse and cause taxable amounts of $55,000 in 2022, $60,000 in 2023, and $75,000 in 2024. Starfleet’s pretax financial income for 2021 is $400,000, and the tax rate is 30% for all years. There are no other deferred taxes at the beginning of 2021.

Instructions

a. Compute taxable income and income taxes payable for 2021.

b. Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2021.

c. Prepare the income tax expense section of the income statement for 2021, beginning with the line “Income before income taxes.”