Arndt, Inc., reported the following for 2018 and 2019 ($ in millions): PLEASE FILL IN THE BLANKS

	2018				2019
Revenues	$	995			$	1,055
Expenses		798				838
Pretax accounting income (income statement)	$	197			$	217
Taxable income (tax return)	$	185			$	255
Tax rate: 40%

1. Expenses each year include $40 million from a two-year casualty insurance policy purchased in 2018 for $80 million. The cost is tax deductible in 2018.
2. Expenses include $3 million insurance premiums each year for life insurance on key executives.
3. Arndt sells one-year subscriptions to a weekly journal. Subscription sales collected and taxable in 2018 and 2019 were $38 million and $67 million, respectively. Subscriptions included in 2018 and 2019 financial reporting revenues were $35 million ($13 million collected in 2017 but not recognized as revenue until 2018) and $43 million, respectively. Hint: View this as two temporary differencesone reversing in 2018; one originating in 2018.
4. 2018 expenses included a $29 million unrealized loss from reducing investments (classified as trading securities) to fair value. The investments were sold in 2019.
5. During 2017, accounting income included an estimated loss of $7 million from having accrued a loss contingency. The loss was paid in 2018 at which time it is tax deductible.
6. At January 1, 2018, Arndt had a deferred tax asset of $8 million and no deferred tax liability.

2. Prepare a schedule that reconciles the difference between pretax accounting income and taxable income. Using the schedule, prepare the necessary journal entry to record income taxes for 2018.

Prepare a schedule that reconciles the difference between pretax accounting income and taxable income. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

($ in millions)	Current Year 2018	Future Taxable Amounts [2019]	Future Deductible Amounts [2019]
Pretax accounting income	$197	$0	$0
Permanent difference:
Life insurance premiums	3	$0	0
Temporary differences:
Casualty insurance expense	(40)	40	0
Subscriptions2017	(13)	0	0
Subscriptions2018		0
Unrealized loss	29	0	(29)
Loss contingency	(7)	0	0
Taxable income	$206
		$40	$(29)
Enacted tax rate (%)	40%	40%	40%
Tax payable currently
Deferred tax liability			0
Deferred tax asset		0
		Deferred tax liability	Deferred tax asset
Ending balances (balances currently needed)
Less: Beginning balances
Changes needed to achieve desired balances		$0	$0