1. Delta Corporation has financial pretax income of $850,000 for 2019. There are three differences between financial pretax income and taxable income.

1. Unearned revenue causes taxable income to be greater than financial income by $80,000. It reverses equally over the next two years.
2. Depreciation on the tax return is $120,000 higher than the amount reported on the financial statements. The difference reverses equally over the next three years
3. The financial statements include $20,000 interest earned on municipal securities.

The companies tax rate for 2019 is 20% and will be the same for all future years.

The company expects to be profitable in future years

Required:

1. Compute taxable income, income taxes payable for 2019.
2. Prepare the journal entry to record income tax expense, income taxes payable and deferred tax for the year.
3. Prepare the income tax expense section of the income statement beginning with income before tax.