Reference no: EM132590958

Question - Harvard Company reports pre-tax financial income of $100,000 for 2010. The following items cause taxable income to be different than pre-tax financial income:

Insurance expenses amounting to $20,000 was prepaid on 12/31/2010. This will expire evenly throughout the next 2 years.

At year-end, tenants owed Harvard rent of $30,000 for the year 2010. Based on past experience, this will be collected in the following year.

Fines for pollution appear as an expense of $5,000 on the income statement

Harvard's tax rate is 30% for all years, and the company expects to report taxable income in all future years. There are no deferred taxes at the beginning of 2010.

Required -

a. Compute taxable income and income taxes payable for 2010.

b. Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2010.