Problem 12 [DTD-deferred revenue-inverted] ABC's tax accounting methods and GAAP accounting methods are the same except for the method used to account for advance payments from customers. Per GAAP, ABC defers recognition of such advance payments (debit cash credit unearned revenue) and recognizes the revenue as it satisfies the related performance obligation (debit uneamed revenue, credit revenue). Per tax rules, ABC is taxed on the advance payments when received without regard to whether the perfomance obligation has been satisfied. ABC reports pretax GAAP earnings of $220,000 for the 12 months ended December 31, 2020. ABC's deferred revenue (relating to advance payments from customers) was $300,000 at December 31, 2020 Embedded in pretax GAAP eamings is $30,000 paid for life insurance premiums on corporate officers (ABC is the beneficiary of the insurance policies). ABC's December 31, 2019 balance sheet showed a deferred tax asset in the amount of $70,000 pertaining to the deductible temporary difference that stems from the GAAP tax difference in the accounting for advance payments from customers. Required 1. Prepare the entries needed to record current and deferred income taxes at December 31, 2020. Assume a 21% corporate tax rate. Further assume that at both 12/31/2019 and 12/31/2020. management believes it is more likely than not" that the deferred tax asset will be fully realized. Enter your entries below. Choose the account from the drop-down list in the yellow cell. Enter the amount of the entry in the green box. Account Debit Credit 1 1 1 1 1 1 1 Enter your answer to the following question in the green box What amount of net income will be reported on the 2020 income statement? 2 2 Columni . B c D Column1 Deferred income tax asset (Bal. Sht) Deferred income tax asset valuation allowance (Bal. Sht) Deferred income tax liability (Bal.Sht) Income tax payable (Bal.Sht) Liability for uncertain tax position (Bal. Sht) Income tax expense (Inc. Stmt) E TI Problem 12 [DTD-deferred revenue-inverted] ABC's tax accounting methods and GAAP accounting methods are the same except for the method used to account for advance payments from customers. Per GAAP, ABC defers recognition of such advance payments (debit cash credit unearned revenue) and recognizes the revenue as it satisfies the related performance obligation (debit uneamed revenue, credit revenue). Per tax rules, ABC is taxed on the advance payments when received without regard to whether the perfomance obligation has been satisfied. ABC reports pretax GAAP earnings of $220,000 for the 12 months ended December 31, 2020. ABC's deferred revenue (relating to advance payments from customers) was $300,000 at December 31, 2020 Embedded in pretax GAAP eamings is $30,000 paid for life insurance premiums on corporate officers (ABC is the beneficiary of the insurance policies). ABC's December 31, 2019 balance sheet showed a deferred tax asset in the amount of $70,000 pertaining to the deductible temporary difference that stems from the GAAP tax difference in the accounting for advance payments from customers. Required 1. Prepare the entries needed to record current and deferred income taxes at December 31, 2020. Assume a 21% corporate tax rate. Further assume that at both 12/31/2019 and 12/31/2020. management believes it is more likely than not" that the deferred tax asset will be fully realized. Enter your entries below. Choose the account from the drop-down list in the yellow cell. Enter the amount of the entry in the green box. Account Debit Credit 1 1 1 1 1 1 1 Enter your answer to the following question in the green box What amount of net income will be reported on the 2020 income statement? 2 2 Columni . B c D Column1 Deferred income tax asset (Bal. Sht) Deferred income tax asset valuation allowance (Bal. Sht) Deferred income tax liability (Bal.Sht) Income tax payable (Bal.Sht) Liability for uncertain tax position (Bal. Sht) Income tax expense (Inc. Stmt) E TI