The following differences enter into the reconciliation of financial income and taxable income of Abbott Company for the year ended December 31, 2020, its first year of operations. The enacted income tax rate is 20% for all years.

Pretax accounting income	800,000
Excess tax depreciation	(480,000)
Litigation accrual	70,000
Unearned rent revenue deferred on the books but
appropriately recognized in taxable income	60,000
Interest income from New York municipal bonds	(20,000)
Taxable income	430,000

1. Excess tax depreciation will reverse equally over a four-year period, 2021-2024.

2. It is estimated that the litigation liability will be paid in 2024.

3. Rent revenue will be recognized during the last year of the lease, 2024.

4. Interest revenue from the New York bonds is expected to be $20,000 each year until their maturity at the end of 2024.

Instructions

(1) Make journal entries to record income tax expense for the year 2020.

(2) Prepare the income tax expense section of the income statement, beginning with "Income before income taxes." Indicate how the income tax items should be presented on the balance sheet.

(3) Assuming that the tax rate is revised to 25% on January 1, 2024, prepare the adjusting entries on January 1, 2024.