Reference no: EM133433448

Question: Jupiter Corp. reported pretax accounting income of the following amounts:

2019: $90 million

2020: $112 million

2021: $104 million

• During 2019, the company recorded prepaid expenses of $40 million. The entire $40 million is deductible for tax purposes in 2019, but will be expensed in the financial statements in the amounts of $25 million during 2020 and $15 million during 2021 when the expenses are incurred.

• During 2019, the company recorded unearned revenues of $18 million from customers for services to be provided during the next two years. The cash received is taxable in 2019, but will be recorded as income for financial reporting purposes when earned in the amounts of $12 million for 2020 and $6 million for 2021.

• The 2019 and 2021 income statements include interest from municipal bonds of $6 million and $2 million, respectively.

• The enacted tax rate is 30% in 2019 and 2020, but increases to 40% in 2021. The tax rate change for 2021 is known (enacted) during 2019.

A) What is taxable income for 2019, 2020 and 2021?

B) Prepare the tax journal entries for 2019, 2020 and 2021. Please round your calculations to one decimal point.