The following data represent the differences between accounting and tax income for Seafood Imports Inc., whose pre-tax accounting income is $750,000 for the year ended December 31. The company's income lax

rate is 45%. Additional information relevant to income taxes includes the following.

a. Capital cost allowance of $270,000 exceeded accounting depreciation expense of $150,000 in the current year.

b. Rents of $30,000, applicable to next year, had been collected in December and deferred for financial statement purposes but are taxable in the year received.

c. In a previous year, the company established a provision for product warranty expense. A summary of the current year's transactions appears below:

li.

Warranty Expense for the year

lit. Payments made to fulfill product warranties

42.500

35,000

d. Insurance expense to cover the company's executive officers was $7,000 for the year.

Required:

1. Calculate Taxable Income.

2. Prepare all the journal entries to record income taxes for Seafood Imports.