Starfleet Corporation has one temporary difference at the end of 2018 that will reverse and cause taxable amounts of $55,000 in 2019, $60,000 in 2020, and $75,000 in 2021. Starfleet's pretax financial income for 2018 is $400,000, and the tax rate is 30% for all years. There are no deferred taxes at the beginning of 2018.
Instructions
a. Compute taxable income and income taxes payable for 2018.
b. Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2018.
c. Prepare the income tax expense section of the income statement for 2018, beginning with the line "Income before income taxes."