Question 1 (Temporary Differences)

Cinderella has two temporary differences between its pretax financial income and taxable income. The information is shown below:

2012 2013 2014

Pretax financial income $840,000 $910,000 $945,000

Excess depreciation expense on tax return ($30,000) ($40,000) ($20,000)

Excess warranty expense in financial income $20,000 $10,000 $8,000

Taxable income $830,000 $880,000 $933,000

The income tax rate for all years is 40%.

Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for each 2012, 2013, and 2014.