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Green Corporation computed a pretax financial income of $3,750,000 for the first year of its operations ended December 31, 2021. Included in financial income
Green Corporation computed a pretax financial income of $3,750,000 for the first year of its operations ended December 31, 2021. Included in financial income was $45,000 of nontaxable revenue, $300,000 gross profit on installment sales that was deferred for tax purposes until the installments were collected, and $90,000 in warranties payable that had been recognized as expense on the books in 2021 when product sales were made. The temporary differences are expected to reverse in the following pattern: Year Gross Profit on Warranty collections payments 2022 $154,000 $50,000 2023 90,000 20,000 2024 36,000 14,000 2025 20,000 6,000 $300,000 $90,000 The enacted tax rates for this year and the next four years are as follows: 2021 -20% 2022-20% 2024 -15% 2025-15% 2023 -20% Required: 1. Prepare journal entries to record income taxes payable and deferred income taxes for the year ended December 31, 2021. Assume there will be sufficient income in each future year to realize any deductible amount. 2. Prepare partial Income statement for the year ended December 31, 2021 beginning with income from continuing operation before income taxes.
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