On December 31, 2021, Raleigh Corporation, in its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows:

Of the $1,200,000 of the accrued warranty expense, $800,000 will be deducted in 2022 and the remaining $400,000 in 2023. The use of the depreciable assets will result in taxable amounts of $450,000 in each of the next three years. The company believes that they will receive the benefit of 80% of any deferred tax assets and will not receive the benefit of the remaining 20%. The income tax rate on all transactions is 20%.

a) Prepare all journal entries that are needed on 12/31/21.

b) Prepare the bottom portion of the income statement, beginning with Income before Income Taxes.

c) Prepare a footnote disclosure of the current and deferred components of income tax expense.?

Pretax financial income Accrued warrenty expenses, deductible for taxes when paid Excess depreciation Taxable income $750,000 1,200,000 -1,350,000 $600,000