For its first year if operations, Altitude Inc. reports pretaxGAAP income of $100,000 in 2020. Assume pretax income in 2021 and2022 of $125,000 and $90,000 respectively. The enacted income taxrate in all years is 25%. The following additional information isavailable for the first three years of operation (with theexception of the one item in the 4th year).
- Prepaid rent in the amount of $20,000 was recorded on December21, 2020 for 2021 rent.
- A warranty accrual of 30,000 was recorded on December 31, 2020.The warranty was paid evenly over the years 2021-2023.
- The company recorded interest revenue of $500 each of the threeyears on municipal bonds.
- Compute the income tax payable each year for 2020, 2021,2022
- Determined the balance of any deferred tax assets or deferredtax liabilities at the end of each year (2020, 2021, 2022)
- Record the journal entry related to taxes in 2020, 2021,20222
