Data shown below is for 2014.

The officers' life insurance expense was $7,000.

The equipment was purchased for $450,000 in early January. Straight-line depreciation over 6 years life

used without recovery value. For tax purposes, Pinecone used a 30% rate to calculate depreciation.

Interest income on municipal bonds totaled $3,600.

Product warranties are estimated at $90,000 in 2014.

Warranties in 2014 were $24,000. The remainder is estimated to be paid equally in 2015 and 2016.

Sales on an accrual basis were $500,000. For tax purposes, $400,000 was saved in the installment.

sales method.

Fines for securities breaches were $10,600.

Fiscal income before tax was $460,000. The tax rate is 40%.

Instructions

(a) Prepare a chart that starts with fiscal income before tax in 2014 and ends with taxable income in 2014.

(b) Prepare journal entry for year 2014 to record income taxes payable, income tax expense and deferred taxes.