Larkspur Inc. has recorded all necessary adjusting entries, except for income tax expense, at its fiscal year end, July 31, 2021. The following information has been taken from the adjusted trial balance: Accounts payable $26,000 Interest expense $5,000 Cash dividends-common 60,500 Notes payable 116,000 Common shares 200,000 Retained earnings (Aug. 1, 2020) 340,400 Cost of goods sold 307,500 Salaries expense 136,000 Dividends payable 15,000 Sales 654,500 Income tax expense 28,500 Supplies expense 12,000 Income tax payable 3,500 Unearned revenue 12,600 All accounts have normal balances and total assets equal $818,500. Larkspur has a 20% income tax rate. Prepare a multiple-step income statement. LARKSPUR INC. Income Statement Year Ended July 31, 2021 V Retained Earnings $ 340,400 Profit 301,500 Ending Balance, July 31 38,900 Ending Balance, July 31 38,900 Begninning Balance. August 1 : Sales $ 654,500 Cost of Goods Sold 307,500 Gross Profit 347,000 Operating Expenses 12,000 Profit From Operations Interest expense 5,000 i Profit Before Income Tax 330,000 Income Tax Expense 28,500 Profit/(Loss) $ 301,500 Prepare required journal entry to adjust income tax expense. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Debit Credit July 31 Income Tax Expense 38,900 Income Tax Payable 38,900 (To record income tax expense.)