KIMCPA is in its first year of operations. The company has pretax income of $200,000 and the following items recorded in its records. Estimated tax payments of $10,000 were made during Year 1. Entertainment expense $10,000 Depreciation on tax return in excess of book depreciation 14,000 Interest on municipal bond 5,000 Ending balance for allowance for uncollectible accounts 1,000 Bad debt expense 3,500 Tax rate for Year 1 : 25% Enacted tax rate for Year 2 and thereafter : 30% Instructions (1) Prepare the statement of income during Year 1. Pre-tax financial income Income tax expense-current Income tax expense-deferred Net income Effective tax rate (2) Prepare the tax accounts section of balance sheet as of December 31, Year 1. Income tax payable Deferred tax assets Deferred tax liabilities KIMCPA is in its first year of operations. The company has pretax income of $200,000 and the following items recorded in its records. Estimated tax payments of $10,000 were made during Year 1. Entertainment expense $10,000 Depreciation on tax return in excess of book depreciation 14,000 Interest on municipal bond 5,000 Ending balance for allowance for uncollectible accounts 1,000 Bad debt expense 3,500 Tax rate for Year 1 : 25% Enacted tax rate for Year 2 and thereafter : 30% Instructions (1) Prepare the statement of income during Year 1. Pre-tax financial income Income tax expense-current Income tax expense-deferred Net income Effective tax rate (2) Prepare the tax accounts section of balance sheet as of December 31, Year 1. Income tax payable Deferred tax assets Deferred tax liabilities