The following information was disclosed during the audit ofCullumberInc.

1.

Year

Amount Due

per Tax Return

2020

$134,300

2021

101,500

2.

On January 1, 2020, equipment costing $599,900is 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 inAppendix 11Amust be used.)3.

In January 2021, $231,300is collected in advance rental of a building for a 3-year period. The entire $231,300is reported as taxable income in 2021, but $154,200of the $231,300is 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 is20% 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.Cullumberexpects to report taxable income in each of the next 5 years.

Draft the income tax section of the income statement for 2021, beginning with "Income before income taxes."