Background

Gallo Light began operations in 2021. The company sometimes sells used warehouses on an installment basis. For these installment sales, Gallo follows GAAP when preparing its financial statements. GAAP is accrual basis and says all of the installment sale income should be recorded at the time of the sale, even if cash has not been collected from the customer.

In its income tax return, however, Gallo follows IRS tax rules. In this area, IRS rules are cash basis and say installment sale income should be recorded only when the customer has paid.

Sales and collections

Total installment sales for 2021 were $120,000. The cash related to these sales was collected from the customer as follows: $80,000 in 2022 and $40,000 in 2023

Tax rates

The tax rates in each were: 25% in 2021, 25% in 2022, and 30% in 2023.

Pretax accounting income

Excluding the installment sales discussed above, the company's pretax accounting (GAAP) income was: $710,000 in 2021, $710,000 in 2022, and $710,000 in 2023.

Required: Prepare the appropriate journal entries to record Gallo Light's 2021, 2022, and 2023 income taxes. Show your calculations.