During 2020, Martinez Co.s first year of operations, the company reports pretax financial income at...
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During 2020, Martinez Co.s first year of operations, the company reports pretax financial income at $236,700. Martinezs enacted tax rate is 45% for 2020 and 20% for all later years. Martinez expects to have taxable income in each of the next 5 years. The effects on future tax returns of temporary differences existing at December 31, 2020, are summarized as follows.
| Future Years | |||||||||||||||
| 2021 | 2022 | 2023 | 2024 | 2025 | Total | ||||||||||
| Future taxable (deductible) amounts: | |||||||||||||||
| Installment sales | $30,900 | $30,900 | $30,900 | $92,700 | |||||||||||
| Depreciation | 6,100 | 6,100 | 6,100 | $6,100 | $6,100 | 30,500 | |||||||||
| Unearned rent | (52,900) | (52,900) | (105,800) | ||||||||||||
1. Compute taxable income for 2020.
2. Prepare the journal entry to record income taxes payable, deferred taxes, and income tax expense for 2020
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