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In 2022, its first year of operations, the Pane Company reported taxable income of 70000. Included it the 70000 was 10000 of rent revenue receivable

In 2022, its first year of operations, the Pane Company reported taxable income of 70000.

Included it the 70000 was 10000 of rent revenue receivable in advance, in which taxable when received in 2020 but not included in pretax accounting income until 2021. Assume the income tax rate is 25% for 2020 and 20% for 2021.

a. Prepare the income tax journal entry for the Zane company for 2020. Assume a valuation account is not necessary

b. Assume, instead, that based on verifiable evidence Zane needs a valuation allowance of 40% of the ending differed tax asset. Prepare journal entry to record the valuation allowance.

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