Taxable income and pretax financial income would be identical for Huber Co. except for its treatments of gross profit on installment sales and estimated costs of warranties. The following income computations have been prepared.

The tax rates in effect are: 2007, 40%; 2008 and 2009, 45%. All tax rates were enacted into law on January 1, 2007. No deferred income taxes existed at the beginning of 2007. Taxable income is expected in all future years.
Instructions
Prepare the journal entry to record income tax expense, deferred income taxes, and income tax payable for 2007, 2008, and2009.

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Taxable income 2007 2008 2009 Excess of revenues over expenses (excluding two temporary differences) Installment gross profit collected Expenditures for warranties $160,000 8,000 (5,000) $163,000 $210,000 8,000 (5,000) $213,000 $90,000 8,000 (5,000) $93,000 Taxable income Pretax financial income Excess of revenues over expenses 2008 2009 $160,000 24,000 (15,000) $169,000 $210,000 $90,000 excluding two temporary differences Installment gross profit earned Estimated cost of warranties Income before taxes $210,000 $90,000