Southern Atlantic Distributors began operations in January 2021 and purchased a delivery truck for $40,000. Southern Atlantic plans to use straight-line depreciation over a four-year expected useful life for financial reporting purposes. For tax purposes, the deduction is 40% of cost in 2021, 30% in 2022, and 30% in 2023. Pretax accounting income for 2021 was $480,000, which includes interest revenue of $64,000 from municipal governmental bonds. The enacted tax rate is 25%. Assuming no differences between accounting income and taxable income other than those described above: Required: 1. Complete the following table given below and prepare the journal entry to record income taxes in 2021. 2. What is Southern Atlantics 2021 net income?

		Tax Rate %		Tax $	Recorded as:
Pretax accounting income	$480,000
Permanent difference	$ 64 incorrect
Income subject to taxation	$480,064	x	25%		$120,016	Income tax expense
Temporary difference	$6 incorrect	x	25%	=	$2	Deferred tax liability
Income taxable in current year	$480,070	x	25%	=	$120,018	Income tax payable

Required 1 GJ

No	Transaction	General Journal	Debit	Credit
1	1	Income tax expenses
		Deferred tax liability
		Income tax payables

2. Net income =