Flynn Inc. has two temporary differences at the end of 2022. The first difference stems from installment sales, and the second one results from the accrual of a loss contingency. Flynn’s accounting department has developed a schedule of future taxable and deductible amounts related to these temporary differences as follows.

As of the beginning of 2022, the enacted tax rate is 34% for 2022 and 2023, and 38% for 2024–2027. At the beginning of 2022, the company had no deferred income taxes on its statement of financial position. Taxable income for 2022 is $400,000. Taxable income is expected in all future years.

Instructions

a. Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2022.

b. Indicate how deferred income taxes would be classified on the statement of financial position at the end of 2022.

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2023 2024 2025 2026 Taxable amounts $40,000 $50,000 $60,000 $90,000 Deductible amounts (15,000) (19,0o0) $40,000 $35,000 $41,000 $90,000