Riley Inc. reports the following pre-tax incomes (losses) for both financial reporting purposes and tax purposes:

Year	Accounting Income (Loss)	Tax Rate
2017	$120,000	25%
2018	90,000	25%
2019	(235,000)	30%

At December 31, 2019, Riley it had a $4,500 balance in the Deferred Tax Liability account that pertains to property, plant, and equipment differences between UCC and carrying value. Riley's income before income tax for 2020 was $60,000.

The following items caused the only differences between accounting income before income tax and taxable income in 2020.

1. In 2020, the company paid $56,250 for rent; of this amount, $18,750 was expensed in 2020. The other $37,500 will be expensed equally over the 2021and 2022 accounting periods. The full $56,250 was deducted for tax purposes in 2020.

2. Riley Inc. pays $9,000 a year for a membership in a local golf club for the company's president.

3. Riley Inc. now offers a one-year warranty on all its merchandise sold. Warranty expenses for 2020 were $9,000. Cash payments in 2020 for warranty repairs were $4,500.

4. Meals and entertainment expenses were $12,000 for 2020.

5. The depreciation expense for the year was $150,000 and the maximum allowable CCA was taken was $162,000 in 2020. There were no asset disposals for 2020. The UCC was $648,000 and the carrying value was $675,000 as the end of 2020.

Income tax rate for 2020 is 30% and for 2021 is 32%.

REQUIRED:

1. Prepare the journal entries for each of the years 2017 to 2019 to record income tax. Assume the tax loss is first carried back and that at the end of 2019, the loss carryforward benefits are judged more likely than not to be realized in the future.

(b) Calculate the taxable income for 2020.

(c) Calculate the balance in the Deferred Tax Asset and/or Deferred Tax Liability accounts at December 31, 2020.

(d) Prepare the journal entries to record income taxes for 2020.

(e) Prepare the income tax expense section of the income statement for 2020, beginning with the line Income before income tax.