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The following information has been obtained for Blue Corporation. 1. Prior to 2020, taxable income and pretax financial income were identical. 2. Pretax financial income

The following information has been obtained for Blue Corporation.

1. Prior to 2020, taxable income and pretax financial income were identical.
2. Pretax financial income is $1,649,000 in 2020 and $1,476,000 in 2021.
3. On January 1, 2020, equipment costing $1,140,000 is purchased. It is to be depreciated on a straight-line basis over 5 years for tax purposes and over 8 years for financial reporting purposes. (Hint: Use the half-year convention for tax purposes, as discussed in Appendix 11A.)
4. Interest of $55,000 was earned on tax-exempt municipal obligations in 2021.
5. Included in 2021 pretax financial income is a gain on discontinued operations of $183,000, which is fully taxable.
6. The tax rate is 20% for all periods.
7. Taxable income is expected in all future years.

Compute taxable income and income taxes payable for 2021.

Taxable income

$

Income taxes payable

$

eTextbook and Media

List of Accounts

Prepare the journal entry to record 2021 income tax expense, income taxes payable, and deferred taxes. (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

eTextbook and Media

List of Accounts

Prepare the bottom portion of Blues 2021 income statement, beginning with Income from continuing operations before income taxes. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Blue Corporation Income Statement (Partial) December 31, 2021For the Year Ended December 31, 2021For the Quarter Ended December 31, 2021

Applicable Income TaxCurrentDeferredDividendsExpensesGain on Discontinued OperationsIncome from Continuing OperationsIncome from Continuing Operations before Income TaxesIncome Tax ExpenseNet Income / (Loss)Retained Earnings, January 1Retained Earnings, December 31RevenuesTotal ExpensesTotal Revenues

$

Applicable Income TaxCurrentDeferredDividendsExpensesGain on Discontinued OperationsIncome from Continuing OperationsIncome from Continuing Operations before Income TaxesIncome Tax ExpenseNet Income / (Loss)Retained Earnings, January 1Retained Earnings, December 31RevenuesTotal ExpensesTotal Revenues

Applicable Income TaxCurrentDeferredDividendsExpensesGain on Discontinued OperationsIncome from Continuing OperationsIncome from Continuing Operations before Income TaxesIncome Tax ExpenseNet Income / (Loss)Retained Earnings, January 1Retained Earnings, December 31RevenuesTotal ExpensesTotal Revenues

$

Applicable Income TaxCurrentDeferredDividendsExpensesGain on Discontinued OperationsIncome from Continuing OperationsIncome from Continuing Operations before Income TaxesIncome Tax ExpenseNet Income / (Loss)Retained Earnings, January 1Retained Earnings, December 31RevenuesTotal ExpensesTotal Revenues

Applicable Income TaxCurrentDeferredDividendsExpensesGain on Discontinued OperationsIncome from Continuing OperationsIncome from Continuing Operations before Income TaxesIncome Tax ExpenseNet Income / (Loss)Retained Earnings, January 1Retained Earnings, December 31RevenuesTotal ExpensesTotal Revenues

Applicable Income TaxCurrentDeferredDividendsExpensesGain on Discontinued OperationsIncome from Continuing OperationsIncome from Continuing Operations before Income TaxesIncome Tax ExpenseNet Income / (Loss)Retained Earnings, January 1Retained Earnings, December 31RevenuesTotal ExpensesTotal Revenues

AddLess: Applicable Income TaxCurrentDeferredDividendsExpensesGain on Discontinued OperationsIncome from Continuing OperationsIncome from Continuing Operations before Income TaxesIncome Tax ExpenseNet Income / (Loss)Retained Earnings, January 1Retained Earnings, December 31RevenuesTotal ExpensesTotal Revenues

Applicable Income TaxCurrentDeferredDividendsExpensesGain on Discontinued OperationsIncome from Continuing OperationsIncome from Continuing Operations before Income TaxesIncome Tax ExpenseNet Income / (Loss)Retained Earnings, January 1Retained Earnings, December 31RevenuesTotal ExpensesTotal Revenues

$

eTextbook and Media

List of Accounts

Indicate how deferred income taxes should be presented on the December 31, 2021, balance sheet.

Blue Corporation Balance Sheet (Partial) December 31, 2021For the Year Ended December 31, 2021For the Quarter Ended December 31, 2021

Current AssetsCurrent LiabilitiesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesProperty, Plant and EquipmentStockholders' EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders' EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal Stockholders' Equity

$

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