The ET Mag Company of Benicia California has pretax financial income (Income Before Tax) at the end of December 2020 of $327,000.

There are 3 differences between the pretax financial statement and the tax return income as shown below:

 

3 items were different on the Financial Statement compared to Tax Return

            Financial Statement                                                      Tax Return

a.  Depreciation "S/L" $21,000                                          $42,000 "accelerated"

b.  Percentage of Completion Profit $60,000                   -0- completed contract

c. "Unearned" Revenue of $20,000                                 $ 5,000 earned this year

Required:

1. Prepare a handy schedule that shows the reconciliation between "F/S" and "T/R".

 

2. Complete the schedule to reflect:

     a. Income Tax Expense

     b. Income Tax Payable

    c. Deferred Income Taxes

 

3. Prepare the December 31, 2020 year end adjusting entry to record income tax expense, income tax payable and any deferred income taxes.

Note: Tax Rate is 30%