The accounting records of Shinault Inc. show the following data for 2015.

1. Equipment was acquired in early January for $300,000. Straight-line depreciation over a 5-year life is used, with no residual value. For tax purposes, Shinault used a 30% rate to calculate depreciation.

2. Interest revenue on governmental bonds totaled $4,000.

3. Product warranties were estimated to be $50,000 in 2015. Actual repair and labor costs related to the warranties in 2015 were $10,000. The remainder is estimated to be paid evenly in 2016 and 2017.

4. Sales on an accrual basis were $100,000. For tax purposes, $75,000 was recorded on the installmentsales method.

5. Fines incurred for pollution violations were $4,200.

6. Pretax financial income was $750,000. The tax rate is 30%.

Instructions

(a) Prepare a schedule starting with pretax financial income in 2015 and ending with taxable income in 2015.

(b) Prepare the journal entry for 2015 to record income taxes payable, income tax expense, and deferred income taxes.