The following information has been obtained for Waterway Corporation. 1. Prior to 2020, taxable income and pretax financial income were identical. 2 Pretax financial income is $1,634,000 in 2020 and $1,359,000 in 2021. 3 On January 1, 2020, equipment costing $1,260,000 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.) Interest of $57,000 was earned on tax-exempt municipal obligations in 2021. 5. Included in 2021 pretax financial income is a gain on discontinued operations of $195,000, which is fully taxable. The tax rate is 20% for all periods. 7 Taxable income is expected in all future years. 6. * Your answer is incorrect. Try again. Compute taxable income and income taxes payable for 2021. Taxable income 1321500 Income taxes payable 2643001 SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT LINK TO TEXT Your answer is partially correct. Try again. 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 o for the amounts.) Account Titles and Explanation Debit Credit Income Tax Expense 245400 Deferred Tax Liability 18900 Income Tax Payable 2643001 No Entry Prepare the bottom portion of Waterway's 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).) Waterway Corporation Income Statement (Partial) For the Quarter Ended December 31, 2021 Income from Continuing Operations before Income Taxes 1164000 Income Tax Expense Current 225300 Deferred 18900 244200 Income from Continuing Operations 919800 Gain on Discontinued Operations 195000 Less 1 Income Tax Expense 39000 156000 Net Income / (Loss) 1075800 SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT LINK TO TEXT Your answer is partially correct. Try again. Indicate how deferred income taxes should be presented on the December 31, 2021, balance sheet. Waterway Corporation Balance Sheet (Partial) December 31, 2021 Long-term Liabilities Deferred Tax Liability 37800 The following information has been obtained for Waterway Corporation. 1. Prior to 2020, taxable income and pretax financial income were identical. 2 Pretax financial income is $1,634,000 in 2020 and $1,359,000 in 2021. 3 On January 1, 2020, equipment costing $1,260,000 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.) Interest of $57,000 was earned on tax-exempt municipal obligations in 2021. 5. Included in 2021 pretax financial income is a gain on discontinued operations of $195,000, which is fully taxable. The tax rate is 20% for all periods. 7 Taxable income is expected in all future years. 6. * Your answer is incorrect. Try again. Compute taxable income and income taxes payable for 2021. Taxable income 1321500 Income taxes payable 2643001 SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT LINK TO TEXT Your answer is partially correct. Try again. 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 o for the amounts.) Account Titles and Explanation Debit Credit Income Tax Expense 245400 Deferred Tax Liability 18900 Income Tax Payable 2643001 No Entry Prepare the bottom portion of Waterway's 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).) Waterway Corporation Income Statement (Partial) For the Quarter Ended December 31, 2021 Income from Continuing Operations before Income Taxes 1164000 Income Tax Expense Current 225300 Deferred 18900 244200 Income from Continuing Operations 919800 Gain on Discontinued Operations 195000 Less 1 Income Tax Expense 39000 156000 Net Income / (Loss) 1075800 SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT LINK TO TEXT Your answer is partially correct. Try again. Indicate how deferred income taxes should be presented on the December 31, 2021, balance sheet. Waterway Corporation Balance Sheet (Partial) December 31, 2021 Long-term Liabilities Deferred Tax Liability 37800