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At the end of 2020, Payne Industries had a deferred tax asset account with a balance of $125 million attributable to a temporary book-tax difference of $500 million in a liability for estimated expenses. At the end of 2021, the temporary difference is $384 million. Payne has no other temporary differences and no valuation allowance for the deferred tax asset. Taxable income for 2021 is $900 million and the tax rate is 25%. Required: 1. What's tax payable in 2021 (2 points)? 2. Does the firm have future taxable amounts or future deductible amounts in 2021 (1 point)? 3. What amount of deferred tax asset or deferred tax liability should be adjusted by the firm in 2021 (3 points)? 4. Based on your answers to a-c above, please prepare the appropriate journal entry to record the firm's income taxes for 2021 (3 points). 5. Assuming it is more likely than not that only 80% of the deferred tax asset ultimately will be realized, please prepare the journal entry to record the valuation allowance (3 points). 6. Assume a new tax law is enacted in 2021 that causes the tax rate to change from 25% to 35% beginning in 2022. (The rate remains 25% for 2021 taxes.) Please prepare the appropriate journal entry to record the firm's income taxes for 2021 (5 points). At the end of 2020, Payne Industries had a deferred tax asset account with a balance of $125 million attributable to a temporary book-tax difference of $500 million in a liability for estimated expenses. At the end of 2021, the temporary difference is $384 million. Payne has no other temporary differences and no valuation allowance for the deferred tax asset. Taxable income for 2021 is $900 million and the tax rate is 25%. Required: 1. What's tax payable in 2021 (2 points)? 2. Does the firm have future taxable amounts or future deductible amounts in 2021 (1 point)? 3. What amount of deferred tax asset or deferred tax liability should be adjusted by the firm in 2021 (3 points)? 4. Based on your answers to a-c above, please prepare the appropriate journal entry to record the firm's income taxes for 2021 (3 points). 5. Assuming it is more likely than not that only 80% of the deferred tax asset ultimately will be realized, please prepare the journal entry to record the valuation allowance (3 points). 6. Assume a new tax law is enacted in 2021 that causes the tax rate to change from 25% to 35% beginning in 2022. (The rate remains 25% for 2021 taxes.) Please prepare the appropriate journal entry to record the firm's income taxes for 2021 (5 points)

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