Textbook Problem

Deferred Taxes: Multiple Rates Wicks Corporation began operations on January 1, 2019. At the end of 2019, Wicks reported pretax financial income of $60,000 and taxable income of $57,700, due to two temporary differences. The income tax rate is 30% for 2019 through 2021, but Congress has enacted a tax rate of 35% for 2022 and beyond. To determine its deferred taxes, Wicks prepared the following schedule of expected future taxable and deductible amounts for the two temporary differences:

Required:

1. 1. Prepare Wicks’s income tax journal entry at the end of 2019. Assume a valuation allowance is not required.
2. 2. Prepare the lower portion of the 2019 income statement for Wicks.