Paula Coal Company purchased equipment for $270,000 on January 2, 2021, its first day of operations. For book purposes, the equipment will be depreciated using the straight-line method over three years with no salvage value. Pretax financial income and taxable income are as follows:

202120222023

Pretax financialincome$156,000$170,000$180,000

Taxableincome120,000 170,000216,000

The temporary difference between pretax financial income and taxable income is due to the use of accelerated depreciation for tax purposes.

Required for Part A:

Prepare the journal entries to record income taxes for all three years (expense, deferrals, and liabilities) assuming that the enacted tax rate as of 2021 is 30% and on January 1, 2022, Congress raises the income tax rate to 35%.