The following information has been obtained from the internal financial records of MTM Company:
Retained earnings, December 31, 2017 .........................................$1,259,000
Dividends declared and paid during 2018 .........................................100,000
Dividends declared during 2018 but not paid .....................................75,000
Dividends declared during 2017 and paid in 2018 .............................90,000
2018 income from continuing operations (before taxes) ................850,000
Loss on accounting change in 2018 (before tax effect) ....................135,000
The company’s tax rate is 35 percent. Assume that financial accounting income equals income for tax purposes.

REQUIRED:
a. What is the company’s net income for the year ended December 31, 2018?
b. Compute income tax expense reported in MTM’s 2018 income statement.
c. Prepare a reconciliation of retained earnings for the year ended December 31, 2018.
d. Assume that the income tax liability account had a balance of $70,000 on January 1, 2018, and that tax payments of $200,000 were made during 2018. What should be the balance in this account on December 31, 2018?