The comparative income statements of Martin Corporation at December 31, 2010, showed the following summarized pretax data:

Included in the 2010 data is a $3,000 expense that was deductible only in the 2009 income tax return (rather than in 2010). The average income tax rate was 30 percent. Taxable income from the income tax returns was 2009, $18,000, and 2010, $27,000.

Required:
1. For each year, compute
(a) Income taxes payable and
(b) Deferred income tax. Is the deferred income tax a liability or an asset? Explain.
2. Show what amounts related to income taxes should be reported each year on the income statement and balance sheet. Assume that income tax is paid on April 15 of the next year.
3. Explain why tax expense is not simply the amount of cash paid during theyear.

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Sales revenue Expenses (excluding income tax) Pretax income Year 2009 $75,000 54,000 $21,000 Year 2010 $82,000 58,000 $24,000