Taxable income and pretax financial income would be identical for Ursula Co. except for its depreciation on equipment purchased in 2014 for $500,000 and estimated costs of warranties. The following income computations have been prepared.

The tax rates in effect are: 2014 and 2015, 30%; 2016 and thereafter, 40%. All tax rates were enacted into law on January 1, 2014. No deferred income taxes existed at the beginning of 2014. Taxable income is expected in all future years.

Instructions
Prepare the journal entry to record income tax expense, deferred income taxes, and income tax payable for 2014, 2015, and2016.

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Taxable income 2014 2015 2016 Excess of revenues over expenses (excluding two Tax Depreciation Expenditures for warranties 630,000 250,000 (200,000) 175,000) (50,000) 380,000 60,000 temporary differences) (125,000) (10,000) S 130,000 (15,000) Taxable income Pretax financial income 2014 2015 2016 Excess of revenues over expenses (excluding two temporary differences 265,000 (100,000) $ 630,000 250,000 (100,000) (100,000) Book depreciation Estimated cost of warranties (75,000) 00 Income before taxes S 90,000 S 530,000 150,000