The pre-tax income statements for Moonstone Ltd. for two years (summarized) were as follows:

2018 2019

Revenues $298,000 $362,000

Expenses 197,000 253,000

Pre-tax income $101,000 $109,000

For tax purposes, the following income tax differences existed:

1. Revenues on the 2019 statement of profit and loss include $53,000 rent, which is taxable in 2018 but was unearned at the end of 2018 for accounting purposes.
2. Expenses on the 2019 statement of profit and loss include political contributions of $20,500, which are not deductible for income tax purposes.
3. Expenses on the 2018 statement of profit and loss include $22,500 of estimated warranty costs, which are not deductible for income tax purposes until 2019.

Required:

1. What was the accounting carrying value and tax basis for unearned revenue and the warranty liability at the end of 2018 and 2019?(Leave no cellsblank - be certain to enter "0" wherever required.)

Year 2018 2019

Unearned Rent Warranty Unearned Rent Warranty

Accounting carrying value

Tax basis

2. Compute (a) income tax payable, (b) deferred income tax, and (c) income tax expense for each period. Assume a tax rate of 30%.(Amounts to be deducted should be indicated by a minus sign.)

2018 2019

a. Income tax payable

b. Deferred income tax

c.Total income tax expense

3. Give the entry to record income taxes for each period.(If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

2018 and 2019

4. Complete statements of profit and loss to include income taxes expense.

Statement of Profit and Loss

2018 2019

Revenues $298,000 $362,000

Expenses 197,000 253,000

Earnings before tax 101,000 109,000

Income tax expense

Net earning (Loss) $101,000 $109,000

5. What amount of deferred income tax will be reported on the statement of financial position at each year-end?

Statement of Financial Position

Non-current asset: 2018 2019