Waterway Corp. sold an investment on an installment basis. The total gain of $84,000 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.

		Financial Accounting		Tax Return
2020 (40% tax rate)
Income before temporary difference		$98,000		$98,000
Temporary difference		84,000		28,000
Income		$182,000		$126,000
2021 (20% tax rate)
Income before temporary difference		$98,000		$98,000
Temporary difference		0		28,000
Income		$98,000		$126,000
2022 (20% tax rate)
Income before temporary difference		$98,000		$98,000
Temporary difference		0		28,000
Income		$98,000		$126,000

Calculate cumulative temporary differences for years 2020-2022.

		2020		2021		2022
Cumulative temporary difference		$		$		$

Calculate current tax expense for years 2020-2022.

Current tax expense benefit for 2020		$
Current tax expense benefit for 2021		$
Current tax expense benefitfor 2022		$

Calculate deferred tax expense for 2020-2022.

Deferred tax benefit expense for 2020		$
Deferred tax benefitexpense for 2021		$
Deferred tax expense benefit for 2022		$

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.

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