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 2019, 20%; 2020 and 2021, 25%. All tax rates were enacted into law on January 1, 2019. No deferred income taxes existed at the beginning of 2019. Taxable income is expected in all future years.

Instructions

Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2019, 2020, and 2021.

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Taxable Income 2019 2020 2021 Excess of revenues over expenses (excluding two temporary differences) Installment gross profit collected Expenditures for warranties $160,000 $210,000 $90,000 8,000 8,000 (5,000) 8,000 (5,000) (5,000) Taxable income $163,000 $213,000 $93,000 Pretax Financial Income Excess of revenues over expenses (excluding two temporary differences) Installment gross profit recognized $160,000 $210,000 $90,000 24,000 -0- (15,000) Estimated cost of warranties -0- Income before taxes $169,000 $210,000 $90,000