Problem I: Fred Corp. is in its first year of operation. The company has pretax financial income of $650,000. The company has the following items recorded in its records. No estimated tax payments were made during 2020.

Proceeds of life insurance for its key officers	100,000
Tax depreciation in excess of book depreciation	11,000
Hazardous waste dumping fine	8,800
Warranty expense	5,000
Actual warranty repairs	6,500
Bad debt expense	3,000
Beginning balance in allowances for uncollectible accounts	1,000
End balance in allowances for uncollectible accounts	1,250
Tax rates for 2020 and future years	20%

INSTRUCTIONS:

(a) Determine taxable income for 2020.

(b) Make the journal entry to record income taxes for 2020.

(c) Prepare the income tax expense section of the income statement for the year ended Dec. 31, 2020.

(d) Indicate how the income tax items should be presented on the balance sheet on Dec. 31, 2020.