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$1.$ Charlotte, Inc. began business on January $1,2022.$ Its pretax financial income for the first two years was as follows:

$2022$ $$640,000$

$2023680,000$

The following items caused the only differences between pretax financial income and taxable income.

i$.$ In $2022,$ the company terminated a top executive and agreed to $150,000$ of severance pay. The amount will be paid $$50,000$ per year for $2022-2024.$ The $2022$ and $2023$ payments were made. For financial statement purposes, the $$150,000$ was expensed in $2022.$ For tax purposes, the severance pay is deductible as it is paid.

ii$.$ In $2022,$ the company reported depreciation expense in its financial statements of $$75,000.$ Depreciation expense for tax purposes was $125,500.$ The difference will reverse evenly over the next three years $(2023-2025)$

The tax rate in $2022$ is $25\%$ and no tax rate changes have been enacted that affect the years $20232025.$

Required:

a$.$ Determine taxable income for $2022$ and $2023.$

b$.$ Determine the deferred income taxes at the end of $2022,$ and prepare the journal entry to record income taxes for $2023.$

c$.$ Determine the deferred income taxes at the end of $2023,$ and prepare the journal entry to record income taxes for $2023.$

d$.$ Prepare the Income Tax section of the income statement, starting with Pretax Net Income and ending with Net Income after Taxes for both $2022$ and $2023.$

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