For the year ended Dec 31, 2020, King Inc. reported pretax accounting income of $800,000. Select information is listed below:

In 2020, the company started issuing stock options to its employees. The compensation expense related to stock options was $80,000. The compensation expense related to stock options is not deductible for tax purpose until the employees exercise the options in the future.

2) In 2020, the company purchased a piece of equipment with a cost of $500,000. For financial reporting purposes, the company used the straight-line method over a 5-year service life with no residual value expected. For tax purposes, the equipment was scheduled to be depreciated by $160,000, $140,000, $120,000, $50,000 and $30,000 in years 2020 through 2024, respectively.

3) During 2020 loss contingency accrued for financial reporting purpose was $45,000. The loss contingency was due to the pending patent lawsuit brought by its long-time competitor, Queen Inc. The payment for the lawsuit is expected to be paid in 2022.

4) In 2020, the company incurred $10,000 from municipal bonds. The interest earned on municipal bonds are exempted for tax purposes.

King Inc.s income tax rate is 20%. At January 1, 2020, the deferred tax asset balance was $40,000 and the deferred tax liability was $5,000.

Required:

a) What is taxable income for 2020?

b) What s the ending balance of DTL on 12/31/2020?

c) What is the ending balance of DTA on 12/31/2020?

d) Prepare journal entries to record income taxes in 2020

e) Prepare 2020 income statement, beginning with"Income before income taxes". You need to reconcile current income tax expense with total income tax expense in this section.