Exercise 19-8

Bramble Company has the following two temporary differences between its income tax expense and income taxes payable.

		2017			2018			2019
Pretax financial income		$873,000			$866,000			$947,000
Excess depreciation expense on tax return		(29,400	)		(39,000	)		(9,600	)
Excess warranty expense in financial income		20,000			9,900			8,300
Taxable income		$863,600			$836,900			$945,700

The income tax rate for all years is 40%.

Assuming there were no temporary differences prior to 2017, prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2017, 2018, and 2019. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Indicate how deferred taxes will be reported on the 2019 balance sheet. Brambles product warranty is for 12 months.

Bramble Company Balance Sheet

Prepare the income tax expense section of the income statement for 2019, beginning with the line Pretax financial income. (Enter loss using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Bramble Company Income Statement (Partial)