At the beginning of 2013, Norris Company had a deferred tax liability of $7,500, because of the use of MACRS depreciation for income tax purposes and units-of-production depreciation for financial reporting. The income tax rate is 30% for 2012 and 2013, but in 2012 Congress enacted a 40% tax rate for 2014 and future years.

Norris's accounting records show the following pretax items of financial income for 2013: income from continuing operations, $165,000 (revenues of $371,000 and expenses of $206,000); gain on disposal of Division F, $22,800; extraordinary loss, $18,600; loss from operations of discontinued Division F, $11,600; and prior period adjustment, $17,400, due to an error that understated revenue in 2012. All of these items are taxable; however, financial depreciation for 2013 on assets related to continuing operations exceeds tax depreciation by $6,200. Norris had a retained earnings balance of $166,000 on January 1, 2013, and declared and paid cash dividends of $45,000 during 2013.

Reuired:

1. Prepare Temporary Income Tax Journal

2.Statement of Retained Earning

Partial Balance Sheet