P16.1 (Three differences, no beginning deferred taxes, multiple rates) The following information is available for Swanson Ltd for the financial year ended 30 June 2006.

1. Depreciation reported on the tax return exceeded depreciation reported on the income statement by $100 000. This difference will reverse in equal amounts of $25 000 over the next 4 financial years. 2. Exempt income received was $10 000. 3. Rent collected in advance on 1 July 2005 totalled $60 000 for a 3-year period. Of this amount, $40 000 was reported as unearned at 30 June 2006 for accounts purposes. 4. The tax rates are 30% for the financial year ended 30 June 2006 and 35% for all subsequent years. 5. Income tax of $360 000 is payable according to the 30 June 2006 tax return. 6. No deferred taxes existed at 1 July 2006.

Required (a) Calculate taxable profit for 30 June 2006. (b) Calculate pre-tax accounting profit for 30 June 2006. (c) Prepare the journal entries to record income tax expense, deferred income taxes, and income tax payable for 30 June 2006 and 2007. Assume taxable profit was $980 000 for 2007.

For part A, am I supposed to the take the $360,000 income tax and divide it by 30%(tax rate), to get the taxable profit?

And I am not sure about part b and c as well. Please help me. Thanks!