Refer to Problem $18-1$ on page $18-58$ of your textbook

P$18\mathrm{.}1($LO $1,2,4)$ Excel $($Three Differences, No Beginning Deferred Taxes, Multiple Rates$)$ The following information is available for Remmers Corporation for $2025.$

$1.$ Depreciation reported on the tax return exceeded depreciation reported on the income statement by $\backslash (\backslash$mathbf$\{\backslash$$ $120,000\}\backslash ).$ This difference will reverse in equal amounts of $\backslash (\backslash$$ $30,000\backslash )$ over the years $2026-2029.$

$2.$ Interest received on municipal bonds was $\backslash (\backslash$$ $10,000\backslash ).$

$3.$ Rent collected in advance on January $1,2025,$ totaled $\backslash (\backslash$$ $60,000\backslash )$ for a $3-$year period. Of this amount, $\backslash (\backslash$$ $40,000\backslash )$ was reported as unearned at December $31,2025,$ for book purposes.

$4.$ The tax rates are $\backslash (20\backslash \%\backslash )$ for $2025$ and $\backslash (17\backslash \%\backslash )$ for $2026$ and subsequent years.

$5.$ Income taxes of $\backslash (\backslash$$ $160,000\backslash )$ are due per the tax return for $2025.$

$6.$ No deferred taxes existed at the beginning of $2025.$

Instructions

a$.$ Compute taxable income for $2025.$

b$.$ Compute pretax financial income for $2025.$

c$.$ Prepare the journal entries to record income tax expense, deferred income taxes, and income taxes payable for $2025$ and $2026.$ Assume taxable income was $\backslash$$$480,000$ in $2026.$

d$.$ Prepare the income tax expense section of the income statement for $2025,$ beginning with "Income before income taxes."

Make the following changes:

$1.$ For item $2,$ assume the interest received is $\backslash (\backslash$$ $18,000\backslash ),$ not $\backslash (\backslash$$ $10,000\backslash ).$

$2.$ For item $4,$ assume the tax rate is $\backslash (21\backslash \%\backslash )$ for all years.

$3.$ Ignore item $5($i$.$e$.,$ income taxes payable will not be $\backslash (\backslash$$ $160,000\backslash )$ in your solution...you will need to calculate the correct amount$).$

Instead of following the Instructions section in the textbook, do the following instead $($show calculations

and prepare journal entries in good form$).$

$1.$ Record the journal entry for income taxes on December $31,2025.$ Financial income is $\backslash (\backslash$$ $225,000\backslash )$ for $2025.$

$2.$ Record the journal entry for income taxes on December $31,2026.$ Financial income is $\backslash$$$149,000$ for $2026($assume the bonds in item $1$ were sold on December $31,2025).$