Use the information for Jenny Corporation in E18.16. Assume that the company reports accounting income of $155,000 in each of 2021 and 2022, and that there is no reversing difference other than the one identified in E18.16. In addition, assume now that Jenny Corporation was informed on December 31, 2021, that the enacted rate for 2022 and subsequent years is 28%. 

Instructions 

a. Calculate the deferred tax balances at December 31, 2021 and 2022. 

b. Calculate taxable income and income tax payable for 2021 and 2022. 

c. Prepare the journal entries to record income taxes for 2021 and 2022. 

d. Prepare the income tax expense section of the income statements for 2021 and 2022, beginning with the line “Income before income tax.”

Data From E18.16.

Jenny Corporation recorded warranty accruals as at December 31, 2020, in the amount of $150,000. This reversing difference will cause deductible amounts of $50,000 in 2021, $35,000 in 2022, and $65,000 in 2023. Jenny's accounting income for 2020 is $135,000 and the tax rate is 25% for all years. There are no deferred tax accounts at the beginning of 2020.