In 2021, the initial year of its existence, Preston Company's accountant, in preparing both the income statement and the tax return, developed the following list of items causing differences between accounting and taxable income: 1. The company sells its merchandise on an installment contract basis. In 2021, Preston elected, for tax purposes, to report the gross profit from these sales in the years the receivables are collected. However, for financial statement purposes, the company recognized all the gross profit in 2021. These procedures created a $300,000 difference between book and taxable incomes in 2021. 2. The company has also chosen to depreciate its depreciable assets on an accelerated basis for tax purposes but on a straight-line basis for accounting purposes. These procedures resulted in $60,000 excess depreciation for tax purposes over accounting depreciation in 2021. 3. Preston rented some of its property to Baker Company on July 1, 2021. The lease was to expire on July 1, 2023 and the monthly rentals were to be $40,000. Baker, however, paid the first year's rent in advance and Preston reported this entire amount on its tax return. These procedures resulted in a $240,000 difference between book and taxable incomes. 4. Preston earned $10,000 interest revenue from the State of Oregon bonds in 2021. Preston showed $10,000 of income from the bonds on its income statement but did not show any of this amount on its tax return. 5. In 2021, Preston insured the lives of its chief executives. The premiums paid amounted to $12,000 and this amount was shown as an expense on the income statement. However, this amount was not deducted on the tax return. The company is the beneficiary. 6. In 2021, Preston Company paid a $12,000 penalty for pollution violations.

b. Prepare the journal entry recording income tax expense, income tax payable, and deferred income taxes for 2021.