Bentall Ink is a chain of tattoo parlors that follows IFRS. The following data is for Year 8:

Golf club dues were $20,000. Fines for operating without the proper city zoning were $10,000.

Automated tattoo machinery was acquired on January 1, Year 7, for $150,000. Straightline depreciation is over a 10year life with a $20,000 residual value. For taxes, the 30% rate class is used, and Bentall Ink applied the CRA one-and-a-half-year rule in Year 7.

On December 31, Year 8, Bentall Ink accrued a provision for legal expense of $40,000. The estimated legal liability of $40,000 relates to four pending lawsuits. In addition to the $40,000 provision, legal costs paid out in cash during Year 8 were $60,000. This related to lawsuits started and settled during Year 8. Bentall Ink believes that the new automated equipment will reduce the number of lawsuits.

Pretax accounting income for Year 8 is $800,000. The income tax rate is 25%.

Required

Complete the following with the details provided.

A. Prepare the schedule, starting with pretax accounting income, to calculate taxable income. On your schedule, indicate a subtotal for accounting income after permanent differences. Round your final answer to the nearest dollar.

B. Prepare the tax-related journal entries for Year 8.

C. What is the dollar amount of income tax expense on the Year 8 Bentall Ink income statement?