Gore Company, organized on January 2, 2016, had pretax accounting income of $7,000,000 and taxable income of $10,000,000 for the year ended December 31, 2016. The 2016 tax rate was 40%. The only difference between book and taxable income is estimated warranty costs. Expected payments and scheduled enacted tax rates are as follows:

2017 $1,000,000 35%

2018 500,000 35%

2019 500,000 35%

2020 1,000,000 30%

Required:

a. Calculate taxable income

b. Prepare one compound journal entry to record Gores provision for taxes for the year 2016.

c. Indicate how much of the deferred tax asset/liability should be classified as current and how much should be classified as long-term on the balance sheet.