Problem 16-4 Change in tax rate; record taxes for four years [L016-1, 16-5] Zekany Corporation would have had identical income before taxes on both its income tax returns and income statements for the years 2018 through 2021 except for differences in depreciation on an operational asset. The asset cost $110,000 and is depreciated for income tax purposes in the following amounts: 2018 2019 2020 2021 $36,300 48,400 16,500 8,800 The operational asset has a four-year life and no residual value. The straight-line method is used for financial reporting purposes Income amounts before depreciation expense and income taxes for each of the four years were as follows 2019 2021 2018 $70,000 %90,000 $80,000 $80,000 2020 Accounting income before taxes and depreciation Assume the average and marginal income tax rate for 2018 and 2019 was 30%; however, during 2019 tax legislation was passed to raise the tax rate to 40% beginning in 2020, The 40% rate remained in effect through the years 2020 and 2021. Both the accounting and income tax periods end December 31. Required Prepare the journal entries to record income taxes for the years 2018 through 2021. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Required Prepare the journal entries to record income taxes for the years 2018 through 2021. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Answer is complete but not entirely correct. No Date General Journal Debit Credit Dec 31, 2018 Income tax expense 12,750 Deferred tax liability Income tax payable 2,640 10,110 Dec 31, 2019 Income tax expense 18,750 Deferred tax liability Income tax payable 6,270 2,480 Dec 31, 2020 Income tax expense Deferred tax liability 23,970 1,430 Income tax payable 25,400 21,000 7,480 4 Dec 31, 2021 Income tax expense Deferred tax liability Income tax payable 28,480 Current Year Future dedutible amounts years 2018 2019 2020 2021 Pre-tax accounting income $70,000.0090,000.00 80,000.00 80,000.00 $36,300.00 48,400.00 16,500.00 $ 8,800.00 Taxable income (tax return) $33,700.00 41,600.00 $ 63,500.00 71,200.00 Less: Depreciation for tax Enacted tax rate 30% 30% 40% 40% Income Tax Payable $10,110.00 12,480.00 25,400.00 $ 28,480.00 Current Year Future Deductible amount Cunulative Difference 2018 2021 Years Straight line depreciation Less:Depreciation for tax Temporary difference 2018 2019 2020 2021 2019 2020 $27,500.00 27,500.00 $ 27,500.00 27,500.00 $ (36,300.00) (48,400.00) $ (16,500.00) $ (8,800.00) (8,800.00)$(20,900.00) $ 11,000.00$ 18,700.00 $ (20,900.00) $ 11,000.00$ 18,700.00 $ 8,800.00 $ 11,000.00 $18,700.00 $29,700.00 $ 18,700.00 $18,700.00 Current Year Future deductible amount 2018 2021 Year Cumulative difference Enacted tax rate Year-end balance Less: Previous balance (Debit)/credit deferred tax liability 2019 2020 8,800.00 29,700.00 18,700.00 S 30% 30% 40% 40% 2,640.00 8,910.00 7,480.00$ 00) (8,910.00)$ (7,480.00) 2,640.00 $ 6,270.00 (1,430.00) (7,480.00) S (2,640
