1.Presented below is information for Santa Cruz Corporation:

a.January 1, 2020, Deferred Tax Liability$300,000

b.January 1, 2020,Deferred Tax Asset$10,000

c.2020 Taxable Income$1,005,000

d.December 31, 2020 - Cumulative temporary differences, giving rise to future taxable amounts$2,030,000

e.Cumulative temporary difference at

December 31, 2020, giving rise to

future deductible amounts$950,000

f.Tax rate for all years20%

g.The company is expected to operate

profitably in the future

Instructions:

a.Compute pretax financial income for 2020

b.Prepare the journal entry to record tax expense, deferred income taxes, and income taxes payable for 2020

c.Compute the effective tax rate for 2020