The following information pertains to Schiff Co.:

1. Pretax financial income for 2020 is $450,000.
2. The enacted tax rate is 30% for all years.
3. A $35,000 estimated liability for settlement of a lawsuit was recognized in the financial statements in 2020 while no expenses were deducted on the tax return. The liability is expected to be settled in 2023.
4. Depreciation reported on the tax return exceeded depreciation reported on the income statement by $240,000. This difference will reverse in equal amounts of $60,000 over the years 2021-2024.
5. Rent for 2020 and 2021, totaling $50,000, was collected in 2020. At December 31, 2020, $25,000 was reported as unearned revenue for financial statement purposes.
6. Interest revenue from City of Chicago bonds was $10,000 in 2020 and is expected to be $10,000 each year until their maturity at the end of 2023.
7. There were no balances at the end of 2019 in either the deferred tax asset or deferred tax liability account.

Required:

1. Compute taxable income for 2020.

Be sure to show all work and clearly identify each item in the calculation to receive full credit.

(b) Prepare a schedule to compute the deferred tax assets and deferred tax liabilities at December 31, 2020. Be sure to show all work and clearly identify each item in the schedule to receive full credit.

(c) Compute total income tax expense for 2020 and then prepare the necessary journal entry for 2020 to record total income tax expense.

Be sure to show all work and clearly identify each item in your calculation to receive full credit.