Problem 19-7

Carla Corp. sold an investment on an installment basis. The total gain of $62,400was reported for financial reporting purposes in the period of sale. The company qualifies to use the installment-sales method for tax purposes. The installment period is 3 years; one-third of the sale price is collected in the period of sale. The tax rate was40% in 2017, and35% in 2018 and 2019. The35% tax rate was not enacted in law until 2018. The accounting and tax data for the 3 years is shown below.

Calculate cumulative temporary differences for years 2017-2019. - Completed

2017 $ 41600

2018 $ 20800

2019 $ 0

Calculate current tax expense for years 2017-2019. - Completed

Current taxexpense for 2017 $37440

Current taxexpense for 2018 $ 32760

Current taxexpense for 2019 $ 32760

A) Calculate deferred tax expense for 2017-2019. - Partially completed see attachment.

B) Prepare the journal entries to record the income tax expense, deferred income taxes, and the income taxes payable at the end of each year. No deferred income taxes existed at the beginning of 2017 - Partially completed see attachment