Sunland Inc. began business on January 1, 2021. Its pretax financial income for the first 2 years was as follows:

2021

$320,0002022

640,000

The following items caused the only differences between pretax financial income and taxable income.

1.

In 2021, the company collected $384,000 of rent; of this amount, $128,000 was earned in 2021; the other $256,000 will be earned equally over the 2022-2023 period. The full $384,000 was included in taxable income in 2021.2.

The company pays $10,800 a year for life insurance on officers.3.

In 2022, the company terminated a top executive and agreed to $114,000 of severance pay. The amount will be paid $38,000 per year for 2022-2024. The 2022 payment was made. The $114,000 was expensed in 2022. For tax purposes, the severance pay is deductible as it is paid.

The enacted tax rates existing at December 31, 2021 are:

2021

20%

2023

30%2022

25%

2024

30%

Determine taxable income for 2021 and 2022.

2021

2022Taxable income

$

$

List of Accounts

Determine the deferred income taxes at the end of 2021. (Enter negative amount using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Deferred income taxes

$

Prepare the journal entry to record income taxes for 2021. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation

Debit

Credit

List of Accounts

Prepare a schedule of future taxable and (deductible) amounts at the end of 2022. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

2023

2024

TotalFuture taxable (deductible) amounts:

Rent

$

$

$

Severance pay

List of Accounts

Prepare a schedule of the deferred tax (asset) and liability at the end of 2022. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Deferred Tax

Temporary Difference

Future Taxable

(Deductible) Amounts

Tax Rate

(Asset)

Liability

Rent

$

%

$

$

Severance pay

%

Totals

$

$

$

List of Accounts

Prepare the journal entry to record income taxes for 2022. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation

Debit

Credit

List of Accounts