Arnold Industries has pretax accounting income of $62 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 $12 million advance rent payment at the inception of the lease is tax-deductible in 2018 but, for financial reporting purposes, represents prepaid rent expense to be recognized equally over the four-year lease term. Required:1. Complete the following table given below and prepare the appropriate journal entry to record Arnold’s income taxes for 2018. ($ in millions) Tax Rate % Tax $Recorded as:Pretax accounting income$40.0 Rent costs reversing in: 2019 x = 2020 x = 2021 x = 2022 x = Total deferred tax amount Income taxable in current year2. Prepare the appropriate journal entry to record Arnold’s income taxes for 2019. Pretax accounting income was $49 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 Arnold’s income taxes for 2019.

Required 1

                                              ($'millions)  Tax Rate(%) Tax($)  Recorded as :

Pretax Accounting Income     $62

Rent costs reversing in:      

2019                                          $3           *     40%=       $1.2  

2020                                         $3           *      40%=       $1.2  

2021                                          $3           *      40%=       $1.2  

2022                                         $3           *       40%=      $1.2  

Tax Deferred Tax Amount                                              $4.8 (Deferred tax liability)

Income Taxable in current year $ 50     *        40%=      $20 (Income tax payable) ($62 -($3 *4 Years))

Year       General Journal                             DebitCredit

2018      Income Tax Expense (20+4.8)     $24.8  

                   Deferred Tax Liability                                 $4.8

                   Income tax payable                                    $20

              (To record Arnold income taxes for 2018)

Required 2  

Year        General Journal                              Debit        Credit

2019        Income Tax Expense ($49*40%)   $19.6

                       Deferred tax liability ($3*40%)                 $1.2  

                        Income tax payable (19.6+1.2)                 $20.8

                (To record Arnold income taxes for 2019)

explanation: doctrine of respondeat superior is a legal doctrine that is commonly used in tort. this principle makes an employer or principal legally responsible for the wrongful acts done by an employee or agent, if such acts occur within the scope of the employment or agency.