Corporation (the Company) maintains its books and records and prepares its outside financial statements on the accrual method. The Company qualifies for and files its income tax returns on the cash method. The Company does not do business in any state except Virginia and files as a C Corporation. The tax rate in Virginia is a flat 6%. The Company uses as calendar year end. The Company is not a personal service corporation. The Company's trial balance for 2021 follows. The Company is exempt from the business interest expense limitations of IRC section 163(j). Trial Balance 12.31.21 Debit Credit Cash 75,000 Accounts receivable 185,000 Allowance for doubtful accounts 3,700 Instalment note receivable 0 Equipment 795,000 Accumulated depreciation 795,000 Accounts payable 14,000 Common stock 2,500 Retained earnings 85,300 Sales 785,000 Interest on instalment note receivable Depreciation 750 15,000 Labor Materials 150,000 450,000 Bad debt expense 2,500 Fines and penalties 250 Interest expense 4,500 Federal taxes 7,500 State income tax expense 1,500 1,686,250 1,686,250 Additional Information 1. As of December 31, 2020, the Company's Accounts Receivable totaled $125,000 and its Accounts Payable at that same date totaled $48,000. 2. In connection with the closing of the Company's 2021 books, the Company decided to increase its allowance for doubtful accounts by $2,500 based on 2% of its year end accounts receivable balance. The beginning of the year allowance for doubtful accounts totaled $1,200 and there were no write offs during calendar year 2021. 3. The Company made estimated tax payments for its expected federal and state taxes for 2021 of $7,500 and $1,500, respectively. These amounts were paid during 2021. 4. There was no balance due with either the Company's federal or state tax returns for 2020. 5. During 2021, the Company purchased a piece of equipment (purchased on 1.1.21) and paid $150,000 cash. The equipment is expected to have a zero-salvage value and a useful life of 10 years. The Company recorded the book depreciation on a straight-line basis and the Company's controller has correctly calculated tax depreciation on this equipment to be $30,000 for the year ended December 31, 2021. 6. The Company paid a fine of $250 for late filing of a federal form 941 related to its payroll deposits for the month of November when the Company's payroll clerk was on an extended leave. 7. The Company's accounts receivable relates exclusively to customer sales and the Company's accounts payable relates exclusively to purchases of materials. 8. During 2021, the Company collected the final payment on an instalment sale from the Company's year ended December 31, 2018. Receipt of this payment was properly recorded, during 2021, as a debit to cash of $26,000, a credit to instalment note receivable of $25,250, and a credit to instalment interest income of $750. At the time of the 2018 instalment sale the gross profit on the sale was properly computed at 30 percent. 3. Compute the balance due with the Company's 2021 federal return and its 2021 state return. 4. Prepare the necessary journal entry to record the Company's current income tax expense based upon the amounts computed in requirements 2 and 3