Waterway Corp. sold an investment on an installment basis. The total gain of $61,200 was reported for financial reporting purposes in the period of sale. The company qualifies to use the installment-sales method for tax purposes. The installment period is 3 years; one-third of the sale price is collected in the period of sale. The tax rate was 40% in 2020, and 20% in 2021 and 2022. The 20% tax rate was not enacted in law until 2021. The accounting and tax data for the 3 years is shown below.

Journal entries needed

Waterway Corp. sold an investment on an installment basis. The total gain of $61 200 was reported for financial reporting purposes in the period of sale. The company qualifies to use the installment sales method for tax purposes. The installment period is 3 years; one- third of the sale pri is collected in the period of sale. The tax rate was 40% in 2020, and 20% in 2021 and 2022. The 20% tax rate was not enacted in law until 2021. The accounting and tax data for the 3 years is shown below. price is come the Financial Accounting Tax Return 2020 (40% tax rate) Income before temporary difference $71,400 $71,400 Temporary difference 61,200 20,400 Income $132,600 $91.800 2021 (20% tax ratel /% Income before temporary difference $71,400 $71.400 Temporary difference 0 20.400 Income $71.400 $91.900 2022(20% tax rate) Income before temporary difference $71,400 $71.400 Temporary difference 0 20.400 Income $71,400 $91.800 (a1) Your answer is correct Calculate cumulative temporary differences for years 2020-2022. (Negative amounts using either a negative sign preceding the numbereg-45 or parentheses es (450) 2020 2021 2022 Cumulative temporary difference $ 40300 $ 20400 D Calculate current tax expense for years 2020-2022. Current tax expense for 2020 $ 36720 Current tax expense V for 2021 $ 18360 Current tax expense V for 2022 $ 18350 Calculate deferred tax expense for 2020-2022. Deferred to expense V for 2020 $ 16320 Deferred tax benefit V for 2021 $ 4030 Deferred tax benefit for 2022 $ 4080i Attempts: 2 of 3 used (a2) Prepare the journal entries to record the income tax expense, deferred income taxes, and the income taxes payable at the end of each year. No deferred income taxes existed at the beginning of 2020. (Credit account titles are automatically indented when amount is entered. Do not inderit manually. If no entry is required, select "No Entry for the account titles and enter for the amounts) Date Account Titles and Explanation Debit Credit 2020 2021 (To record the adjustment for the decrease in the enacted tax rate.) (To record income taxes.) 2022