Question

Wildhorse Co. at the end of 2021, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows:

Pretax financial income		$   710,000
Estimated warranty expenses deductible for taxes when paid		1,140,000
Extra depreciation		(1,629,000)
Taxable income		$  221,000

Estimated warranty expense of $795,000 will be deductible in 2022, $260,000 in 2023, and $85,000 in 2024. The use of the depreciable assets will result in taxable amounts of $543,000 in each of the next three years.

Prepare a table of future taxable and deductible amounts. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

		2022		2023		2024		Total
Future taxable (deductible) amounts
Warranties		$		$		$		$
Excess depreciation

SHOW LIST OF ACCOUNTS

Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2021, assuming an income tax rate of 30% for all years. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation	Debit	Credit

Answer 1