The following information is available for the first two years of operations for Jackson, Inc.

a$.$ The company sells its merchandise on an installment contract basis. In $2024,$

Jackson, Inc. reported gross profit of $$210,000$ tax purposes, and $$280,000$ for

financial statement purposes. This will result in a taxable amount of $$70,000$ in $2025.$

b$.$ Jackson, Inc. insures the lives of its chief executives. The premiums paid amount

each year from $2024-2026$ is $$42,000$ and this amount was shown as an expense on

the income statement.

c$.$ Product warranty expense accrued for financial reporting was $$65,000$ in $2024.$ Actual

warranties paid and deducted on the tax returns was $$20,000$ in $2024.$ The remainder

will be paid $$25,000$ in $2025$ and $$20,000$ in $2026.$

d$.$ Jackson, Inc. earns interest on Massachusetts tax$-$exempt state bonds in the amounts

of $$15,000$ each year in $2024,2025$ and $2026.$

e$.$ In $2024$ the company incurred a lawsuit which is probable and estimated at $$80,000.$ It

has been properly recorded as a litigation liability at $12/31/24$ and will be paid in $2026.$

f$.$ Depreciation of property, plant and equipment for financial reporting purposes amounts

to $$75,000$ each year for $2024-2026.$ The company deducts the full cost under the

IRS Code Section $179$$$225,000$ amount allowed for tax purposes in $2024.$

The enacted tax rates existing for December $31,2024$ are $30\%$ and $34\%$ for $2025$ and thereafter.

Instructions

a Complete the worksheet provided. It includes the following.

i$.$ Prepare a reconciliation of Book Income to Taxable Income for $2024.$

ii$.$ Prepare a schedule of future taxable and $($deductible$)$ amounts at the end of $2024.$

iii. Prepare a schedule of the deferred tax $($asset$)$ and liability at the end of $2024.$

iv$.$ Prepare the journal entry to record income tax expense, deferred income taxes,

and income tax payable for $2024$

b$.$ Show how the deferred income taxes should be reported on the Balance Sheet at December

$31,2024.$

c$.$ Show how the taxes should be reported on the Income Statement at December $31,2024.$