Change in Tax Rates During 2023, the Valley Produce Company reports taxable income and pre-tax accounting income of $800,000 and $550,000, respectively. The difference is attributable to temporary differences of: 1) Estimated litigation expense of $200,000 that is accrued for financial reporting purposes during 2023. Payment on the litigation is not expected until 2026. 2) Valley Produce collects advertising revenue of $50,000 from another company in advance during 2023. The advertising will be earned during 2024 and 2025 (in equal amounts). The current tax rate is 30%. However, the (enacted) tax rate for 2025 and later is 40%. This is the first year of operations for Valley Produce.

REQUIRED:

1. Calculate any deferred tax amounts and income tax payable, and prepare the journal entry for 2023. 2. Alternatively assume that the current tax rate is 40%. Calculate income tax expense, any deferred tax amounts, and income tax payable, and prepare the journal entry for 2023