Question $18$

$15$ pts

Question $25(12$ points$)$: Clay Mudwing Company purchased equipment on January $2,2020,$ its first day of operations. For book purposes, the equipment will be depreciated using the straight$-$line method over three years with no salvage value. The company will take an additional $$30,000$ in depreciation for taxes purposes in $2020$ that reverses evenly over the next two years. Assuming this is the only book$-$tax difference for both $2020$ and $2021.$ The enacted tax rates are $30$ percent for $2020,25$ percent for $2021,$ and $20$ percent for $2022$ and years after $2022.$ Pretax financial income is as follows:

Pre$-$tax Financial $($GAAP$)$ Income for Each Year

$2020,$$$222,000$

$2021,$$$280,000$

Show income tax provision journal entries for both $2020$ and $2021.$ For potential extra credit, feel free to show your work as best you can.