Pole Co. at the end of 2021, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows:

Pretax financial income $ 520,000

Extra depreciation taken for tax purposes (1,200,000)

Estimated expenses deductible for taxes when paid 890,000

Taxable income $ 210,000

Use of the depreciable assets will result in taxable amounts of $400,000 in each of the next three years. The estimated litigation expenses of $890,000 will be deductible in 2024 when settlement is expected.

Instructions

(a) Prepare a schedule of future taxable and deductible amounts.

(b) Prepare the journal entry to record income tax expense deferred taxes and income taxes payable for 2021,assuming a tax rate of 20% for all years.