The following information was disclosed during the audit of Kingbird Inc. 1. Year 2020 2021 Amount Due per Tax Return $132,100 104,200 2. On January 1, 2020, equipment costing $582,800 is purchased. For financial reporting purposes, the company uses straight-line depreciation over a 5-year life. For tax purposes, the company uses the elective straight-line method over a 5-year life. (Hint: For tax purposes, the half-year convention as discussed in Appendix 11A must be used.) 3. In January 2021, $231,900 is collected in advance rental of a building for a 3-year period. The entire $231,900 is reported as taxable income in 2021, but $154,600 of the $231,900 is reported as unearned revenue in 2021 for financial reporting purposes. The remaining amount of unearned revenue is to be recognized equally in 2022 and 2023. 4. The tax rate is 20% in 2020 and all subsequent periods. (Hint: To find taxable income in 2020 and 2021, the related income taxes payable amounts will have to be grossed up.") 5. No temporary differences existed at the end of 2019. Kingbird expects to report taxable income in each of the next 5 years. Determine the amount to report for deferred income taxes at the end of 2020, and indicate how it should be classified on the balance sheet. Amount to report for deferred income taxes 58280 Kingbird Inc. Balance Sheet December 31, 2020 Current Assets Deferred Tax Asset 58280 SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT LINK TO TEXT Prepare the journal entry to record income taxes for 2020. (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 amour Account Titles and Explanation Debit Credit Draft the income tax section of the income statement for 2020, beginning with "Income before income taxes." (Hint: You must compute taxable income and then combine that with changes in cumulative temporary differences to arrive at pretax financial income.) (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Kingbird Inc. Income Statement (Partial) SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT LINK TO TEXT Determine the deferred income taxes at the end of 2021, and indicate how they should be classified on the balance sheet. Deferred income taxess Kingbird Inc. Balance Sheet (Partial) SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT LINK TO TEXT Prepare the journal entry to record income taxes for 2021. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required Account Titles and Explanation Debit Credit SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT LINK TO TEXT Draft the income tax section of the income statement for 2021, beginning with "Income before income taxes." (Enter negative amounts using either a negative sign preceding the numbe Kingbird Inc. Income Statement (Partial)
