The following is information relating to the accounting income of British Columbia Petroleum Corporation for 2019 and 2020:

2019 2020

Accounting income before taxes $10,000 $350,000

Dividend Income (non-taxable) 30,000 0

Depreciation expense 100,000 120,000

Capital cost allowances 70,000 50,000

Warranty expense see note (iv) below 30,000 40,000

Income tax rate 35% 35%

Additional Information: (i) December 31 is the fiscal year-end.

(ii) As of January 1, 2019 the net book value of the equipment was $500,000 and the undepreciated capital cost (UCC) was $300,000. There were no other timing differences.

(iii) The deferred income tax liability account on January 1, 2019 was $70,000 (cr). This balance is entirely related to capital assets.

(iv) During 2019 the company initiated a warranty program. The warranty liability account was $10,000 at December 31, 2019 and $5,000 at December 31, 2020. The Income Tax Act uses the cash basis for determining the tax deductible warranty expense.

Required: 1. Calculate the taxable income for 2019 and 2020 (5 marks)

2. Prepare the journal entries to record all income tax related entries for 2019. (4 marks)

3. Prepare the journal entries to record all income tax related entries for 2020. (4 marks)