Problem 4. Millcroft Inc.computed a pretax financial income of $40,000 for the first year of its operations ended December 31, 2017 Analysis of the tax and book basis of its liabilities disclosed $360,000 in unearned rent revenue on the books that had been recognized as taxable income in 2017 when the cash was received The uneamed rent is expected to be recognized on the books in the following pattern: 2018 $90,000 2019 160,000 2020 70,000 2021 40,000 $360,000 The enacted tax rates for this year and the next four years are as follows: 2017 35% 2018 20% 2019 20% 2020 20% 2021 20% Instructions (1) Prepare a schedule showing the reversal of the temporary difference and the computation of income taxes payable and deferred tax assets or liabilities as of December 31, 2017. (2) Prepare journal entries to record income taxes payable and deferred income taxes. (3) Prepare the income statement for Millcroft beginning with "Income from continuing operations before income taxes" for the year ended December 31, 2017. Problem 5. Radford Appliances computed a pretax financial loss of $110,000 for the first year of its operations ended December 31, Problem 4. Millcroft Inc. computed a pretax financial income of $40,000 for the first year of its operations ended December 31, 2017 Analysis of the tax and book basis of its liabilities disclosed $360,000 in unearned rent revenue on the books that had been recognized as taxable income in 2017 when the cash was received The unearned rent is expected to be recognized on the books in the following pattern: 2018 $90,000 2019 160,000 2020 70,000 2021 40,000 $360,000 The enacted tax rates for this year and the next four years are as follows: 2017 35% 2018 20% 2019 20% 2020 20% 2021 20% Instructions (1) Prepare a schedule showing the reversal of the temporary difference and the computation of income taxes payable and deferred tax assets or liabilities as of December 31, 2017. (2) Prepare journal entries to record income taxes payable and deferred income taxes. (3) Prepare the income statement for Millcroft beginning with "Income from continuing operations before income taxes" for the year ended December 31, 2017