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Arnold Industries has pretax accounting income of $38 million for the year ended December 31, 2018. The tax rate is 40%. The only difference between accounting income and taxable income relates to an operating lease in which Arnold is the lessee. The inception of the lease was December 28, 2018. An $8 million advance rent payment at the inception of the lease is tax-deductible in 2018 but, for financial reporting purposes, represents prepaid rent expense to be recognized equally over the four-year lease term. Required: 1. Complete the following table given below and prepare the appropriate journal entry to record Arnolds income taxes for 2018. 2. Prepare the appropriate journal entry to record Arnolds income taxes for 2019. Pretax accounting income was $44 million for the year ended December 31, 2019. 3. Assume a new tax law is enacted in 2019 that causes the tax rate to change from 40% to 30% beginning in 2020. Complete the following table given below and prepare the appropriate journal entry to record Arnolds income taxes for 2019.

Required 1 Calculation Required 1 GJ Required 2 Required 3 Calculation Required 3 G Complete the following table given below to record Arnold's income taxes for 2018. (Enter your answers in millions decimal place (i.e., 5,500,000 should be entered as 5.5).) Tax Rate % Tax $ Recorded as: ($ in millions) $ 38.0 FA Pretax accounting income Rent costs reversing in: 2019 2020 X 11 2021 X 2022 Total deferred tax amount Income taxable in current year Journal entry worksheet 1 > Record 2018 income taxes. Note: Enter debits before credits. Event General Journal Debit Credit 1 Record entry Clear entry View general Journal Journal entry worksheet Journal entry worksheet 1 Record 2019 income taxes. Note: Enter debits before credits. Event General Journal Debit Credit 1 Record entry Clear entry View general Journal

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