Chapter $18$ Group Assignment

Assume that Bio$-$Tech Company reports pretax financial income of $$200,000$ in each of the years $2026,2027,$ and $2028.$ The company is subject to a $20\%$ tax rate and has the following differences between pretax financial income and taxable income:

Bio$-$Tech reports gross profit of $$18,000$ from an installment sale in $2026.$ It recognizes the entire amount for book purposes in $2026.$ For tax purposes it will recognize revenue over an $18-$month period at a constant amount of $$1,000$ per month beginning January $1,2027.$

It pays life insurance premiums for its key officers of $$5,000$ in $2027$ and $2028.$ Although not tax$-$deductible, Bio$-$Tech expenses the premiums for book purposes.

Provide a reconciliation of Bio$-$Tech's pretax financial income to taxable income and the computation of income taxes payable.

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What are the Journal entries at December $31,2026,2027,$ and $2028$ to record Income tax expense, deferred taxes, and income taxes payable?