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? Question 20 The records for Mercado Co. show this data for 2018: 37 points Save Answer . Revenue recognized in 2018 of $30,000 cannot be taxed until it is collected in 2019. . Life insurance premiums on officers were $7,200. . Machinery was acquired in January for $400,000. Straight-line depreciation over a five-year life (no salvage value) is used. For tax purposes, MACRS depreciation is used and Mercado may deduct 30% for 2018. This difference will reverse in equal amounts over the years 2019-2022. . The estimated warranty liability related to 2018 sales was $18,000. Repair costs under warranties during 2018 were $1,500. The remaining amount of $16,500 will be incurred in amounts of $15,000 in 2019 and $1,500 in 2020. . Pretax financial income is $820,000. The tax rate for 2018 is 30%. The records for Mercado Co. show this data for 2019: . Interest received on tax cxempt Ohio State bonds was $9,000. . Litigation expense accrued during 2019 was $80,000. This amount cannot be deducted for tax purposes until it is paid in 2020. . Rent collected is $35,000 higher than the rent earned in 2019. This will reverse in 2020, . Pretax financial income is $800,000. The tax rate for 2019 and beyond is 40%. Instructions (a) Calculate taxable income for 2018 and 2019. (b) Prepare the journal entry to record income taxes for 2018