The following information has been obtained for the Warner Corporation.

• 2021 is the first year of operations.
• Pretax financial income is $1,700,000 in 2021
• The company collected $190,000 of revenue on January 1, 2021. For accounting purposes, the

Company will recognize one-half of the revenue in 2021 and the other half in 2022. For tax purposes, the entire $190,000 is recognized when received (2021).

• Interest of $60,000 was earned on tax-exempt municipal obligations in 2021.
• On January 1, 2021, a piece of equipment costing $40,000 was purchased. For tax purposes, they are depreciating on a straight-line basis over four years. For book purposes, they are depreciating on a straight-line basis over 8 years with no salvage value.
• In 2021, Warner Corporation accrued warranty expenses exceed its cash payments for warranties by $25,000. A deduction is not allowed for taxes until the cash is paid.
• Warner accrued a litigation expense of $300,000 in 2021. They do not expect to pay the expense until 2022.
• Warner paid a political fine of $6,500 in 2021.
• The enacted tax rates existing at December 31, 2021 is 21%. We expect a future tax rate increase to 30%. The increased tax rate of 30% is greatly anticipated and will be voted on within the next couple of years by Congress

REQUIRED

1. Prepare the 2021 tax schedule showing the reconciliation between pretax financial income and taxable income end deferred tax accounts.

	CURRENT YEAR		FUTURE YEAR	FUTURE YEAR
FIBT			FD-DTA	FT-DTL
Permanent
Temporary
Taxable Income

1. Prepare the journal entry to record income tax expense and all related accounts for 2021

Account	Debit	Credit

2. Prepare the income tax expense section of the income statement for 2021, beginning with the line "Income before income taxes." (Be sure to show current and deferred portions).