Larry Company reports the following revenues and expenses in its pretax financial income for the year ended December 31, 2020:

Revenues	$325,600
Expenses	-212,100
Pretax financial income	$113,500

The revenues and expenses reported for pretax financial income reveals four differences:

1. Nontaxable interest revenue on municipal bonds is $25,000.

2. Three years rent of $60,000 was collected at the beginning of the year.

3. Depreciation deducted for financial reporting exceeded depreciation deducted for income taxes by $11,000.

4. Gross profit on construction contracts using percentage-of-completion per books amounts to $54,000.

Gross profit for tax purpose amounts to $30,000.

At the beginning of 2020 the company had a deferred tax liability of $22,200 related to the depreciation difference. The income tax rate is 20% for all years.

INSTRUCTIONS:

1. Compute the Company's taxable income for the current year (show schedule).

2. Prepare the income tax journal entry of the Company for the current year.

3. Prepare the income tax expense section of the income statement, beginning with "Income before taxes."