During 2020, E Inc. reported $900,000 net income. E uses the allowance method to record bad debt expense and the specific write-off method to record tax depreciation expense. During 2020, E recorded $10,000 more book/financial bad debt expense than tax bad debt expense. This entire difference is expected to reverse during 2019.

During 2020, E paid estimated taxes of $40,000. Es tax rate for all years is 20%.

INSTRUCTIONS:

A. Determine the current, deferred, and total income tax expense that E will report on its 2020 income statement.

B. Determine the deferred tax asset and/or liability that E will report on its 2020 balance sheet and the current tax liability.

C. Prepare the journal entry to record 2020 tax expense.