1. Siakam Inc. showed the following information in their comparative statements of earnings for the years 2019 and 2020. Expenses in 2019 included an amount of $60,000 that was able to be deducted for tax purposes in 2020. The rate of income tax is 35%. Per Siakam Inc.s tax returns, taxable income was $210,000 in 2019 and $150,000 in 2020.

Revenue Expenses (excluding income tax) Pretax earnings

2019 2020

$590,000 $600,000 440,000 390,000 $150,000 $210,000

Required:

1. a) For each year, prepare the journal entry to record incomes taxes payable and income tax expense.

2. b) For both 2019 and 2020, explain why the deferred income tax is an asset or liability.

3. c) What amount would be recorded in the deferred tax asset/liability account at the end of 2020?

4. d) Why is income tax expense not the actual amount of cash paid in the year?