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In 2020, DFS medical supply recognized rent revenue of 500 for financial accounting purpose and...

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Accounting

In 2020, DFS medical supply recognized rent revenue of 500 for financial accounting purpose and collected $600 cash for next year's rent. Unearned rent revenue at the beginning of 2020 was $80. For income tax reporting, the rent is taxed when collected. Pre-tax accounting income was $1600 for 2020.There were no other temporary differences and no permanent differences between taxable income and pre-tax accounting income. The enacted tax rate is 25%.

A) Does the temporary difference due to rent revenue create deferred tax asset or liability? Determine the balance of deferred tax asset (or liability) at the end of the year.

B) Prepare the journal entry to record income tax expense for 2020.

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