Cabot Company reported a pretax operating loss of $177,943 for financial reporting and tax purposes in 2018. The enacted tax rate is 40% for 2018 and subsequent years. Assume that Cabot will carry-forward net operating losses to take advantage of tax benefits related to future tax deductions.

Required:

1. Prepare the journal entry to record Cabot's income taxes for the year 2018. Show well-labeled computations.

2. Compute Cabot's net loss for 2018.