Exercise 19-08

Sweet Company has the following two temporary differences between its income tax expense and income taxes payable.

		2020			2021			2022
Pretax financial income		$872,000			$875,000			$907,000
Excess depreciation expense on tax return		(29,900	)		(40,100	)		(10,100	)
Excess warranty expense in financial income		19,800			10,200			8,400
Taxable income		$861,900			$845,100			$905,300

The income tax rate for all years is 20%.

Assuming there were no temporary differences prior to 2020, prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2020, 2021, and 2022. (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
2020
2021
2022

Indicate how deferred taxes will be reported on the 2022 balance sheet. Sweets product warranty is for 12 months.

Sweet Company Balance Sheet (Partial) December 31, 2022For the Year Ended December 31, 2022For the Quarter Ended December 31, 2022
Current AssetsCurrent LiabilitiesIntangible AssetsLong-term InvestmentsNoncurrent LiabilitiesProperty, Plant and EquipmentStockholders' EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders' EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal Stockholders' Equity
					$

Prepare the income tax expense section of the income statement for 2022, beginning with the line Pretax financial income. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Sweet Company Income Statement (Partial) December 31, 2022For the Year Ended December 31, 2022For the Quarter Ended December 31, 2022
CurrentDeferredDividendsExpensesIncome Tax ExpenseNet Income / (Loss)Pretax Financial IncomeRetained Earnings, January 1Retained Earnings, December 31RevenuesTotal ExpensesTotal Revenues		$
CurrentDeferredDividendsExpensesIncome Tax ExpenseNet Income / (Loss)Pretax Financial IncomeRetained Earnings, January 1Retained Earnings, December 31RevenuesTotal ExpensesTotal Revenues
Current Deferred Dividends Expenses Income Tax Expense Net Income / (Loss) Pretax Financial Income Retained Earnings, January 1 Retained Earnings, December 31 Revenues Total Expenses Total Revenues	$
Current Deferred Dividends Expenses Income Tax Expense Net Income / (Loss) Pretax Financial Income Retained Earnings, January 1 Retained Earnings, December 31 Revenues Total Expenses Total Revenues
CurrentDeferredDividendsExpensesIncome Tax ExpenseNet Income / (Loss)Pretax Financial IncomeRetained Earnings, January 1Retained Earnings, December 31RevenuesTotal ExpensesTotal Revenues		$