Crane Inc. began business on January 1, 2021. Its pretax financial income for the first 2 years was as follows:

2021		$260,000
2022		580,000

The following items caused the only differences between pretax financial income and taxable income.

1.		In 2021, the company collected $366,000 of rent; of this amount, $122,000 was earned in 2021; the other $244,000 will be earned equally over the 20222023 period. The full $366,000 was included in taxable income in 2021.
2.		The company pays $10,200 a year for life insurance on officers.
3.		In 2022, the company terminated a top executive and agreed to $96,000 of severance pay. The amount will be paid $32,000 per year for 2022-2024. The 2022 payment was made. The $96,000 was expensed in 2022. For tax purposes, the severance pay is deductible as it is paid.

The enacted tax rates existing at December 31, 2021 are:

2021		20%		2023		30%
2022		25%		2024		30%

Determine taxable income for 2021 and 2022.

		2021		2022
Taxable income		$		$

Determine the deferred income taxes at the end of 2021.

Deferred income taxes

$

Prepare the journal entry to record income taxes for 2021.

Account Titles and Explanation	Debit	Credit

Prepare a schedule of future taxable and (deductible) amounts at the end of 2022.

		2023		2024		Total
Future taxable (deductible) amounts:
Rent		$		$		$
Severance pay

Prepare a schedule of the deferred tax (asset) and liability at the end of 2022.

Temporary Difference		Future Taxable (Deductible) Amounts		Tax Rate			(Asset)		Liability
Rent		$			%		$		$
Severance pay					%
Totals		$					$		$

Compute the net deferred tax expense (benefit) for 2022.

Net deferred tax expense (benefit) for 2022

$

Prepare the journal entry to record income taxes for 2022.

Account Titles and Explanation	Debit	Credit

Show how the deferred income taxes should be reported on the balance sheet at December 31, 2022.

Crane Inc. Balance Sheet (Partial)
					$