Problem Three (7 points) Magruder Company reports pretax accounting income of \$5,000,000 for 2019. The 2019 Income tax rate is 20\%. INCLUDED in accounting income is depreciatlon expense of $500,000 which was calculated using the stralght line method. Magruder's tax manager indicates that depreciation expense per the tax return will be $2,000,000 because the tax laws allow more accelerated depreciation. Magruder's pretax accounting Income does NOT Indude $1,000,000 of prepald rent that a tenant paid to the company in 2019 because the prepayment represents rent due for 2020 . The accountant properly recorded this amount as a llabillty on the balance sheet (Unearned Rent). The tax manager advises that the $1,000,000 must be IWCUUDED in taxable income for 2019. Required: 1. Calculate taxable income income and income tax papble for 2019. 2. Prepare the adjusting entry to record income tax expense, deferred income taxes, and income tax peyable. Problem Four (8 Points) Ato Company incurs a net operating loss in 2019 of $3,000,000. The loss is the same for pretax accounting Income and for tax purposes (no temporary or permanent differences). Under income tax law, losses may only be carried forward to later vears (carnbacks are not permitted). Alto incurs pretax accounting and taxable income of $5,000,000 in 2020 and ell of the loss carmforward is used to offset some of the 2020 income on the tax return that year. Alto's income tax rate is 218 for all years. Required: 1. Prepare the accounting entries for 2019 to account for the loss carrylonward. 2. Prepare the accounting entries for 2020 to account for taxes that year. 3. Explain when a valuation allowance may have been proper to record in 2019