The following information s available for McKee Corporation for 2012.
  1. Excess of tax depreciation over book depreciation, $40,000. This $40,000 difference will reverse equally over the years 2013–2016.
  2. Deferral, for book purposes, of $25,000 of rent received in advance. The rent will be earned in 2013.
  3. Pretax financial income, $350,000.
  4. Tax rate for all years, 40%.

Instructions
  (a) Compute taxable income for 2012.
  (b) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2012.
  (c) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2013, assuming taxable income of $325,000.