P19-1 Three Differences, No Beginning Deferred Taxes, Multiple Rates

The following information is available for Remmers Corporation for 2017.
1.	Depreciation reported on the tax return exceeded depreciation reported on the income statement
			Difference												$ 120,000
			Annual reversal in equal amounts over the years 2018 to 2021												30,000
2.	Interest received on municipal bonds														10,000
3.	Rent collected in advance on January 1, 2017 for a 3-year period														60,000
	Portion of rent reported as unearned at December 31, 2017 for book														40,000
			purposes
4.	Income tax rate for 2017														40%
	Income tax rate for 2018 and subsequent years														35%
5.	Income taxes due per the tax return for 2017														$ 320,000
6.	No deferred taxes existed at the beginning of 2017.
Instructions:
(a)	Compute taxable income for 2017.
(b)	Compute pretax financial income for 2017.
(c)	Prepare the journal entries to record income tax expense, deferred income taxes, and income taxes payable for 2017 and 2018.
			Taxable income for 2018										$ 980,000
(d)	Prepare the income tax expense section of the income statement for 2017, beginning with "Income before income taxes."