Differences between the accounting methods applied to accounts and financial reports and those used in determining taxable income yielded the following amounts for the first four years of a corporation's operations:

The income tax rate for each of the four years was 40% of taxable income, and each year's taxes were promptly paid.Instructions1. Determine for each year the amounts described by the following captions, presenting the information in the form indicated:

2. Total the first three amount columns.3. Illustrate the effects of recording the current and deferred tax liabilities on the accounts and financial statements for the firstyear.

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First Year Second Year S750,000 700,000 Fourth Year Third Year Income before income taxes Taxable income S1,250,000 1,350,000 $1,000,000 1,075,000 $625,000 500,000