26. Computation of taxable income The records for Orkin Co. show this data for 2018: Gross profit on installment sales recorded on the books was $360,000. Gross profit from collections of installment receivables was $270,000 Life insurance on officers was $3,800 Machinery was acquired in January for $300,000. Straight-line depreciation over a ten-year life (no salvage value) is used. For tax purposes, MACRS depreciation is used and Orkin may deduct 14% for 2018 Interest received on tax exempt lowa State bonds was $9,000 The estimated warranty liability related to 2018 sales was $19,600. Repair costs under warranties during 2018 were $13,600. The remainder will be incurred in 2019 Pretax financial income is $600,000. The tax rate is 30% Instructions Prepare a schedule starting with pretax financial income and compute taxable (a) income (b) Prepare the journal entry to record income taxes for 2018