Murphy Company purchased equipment for $750,000 on January 2, 2017, its first day of operations. For book purposes, the equipment will be depreciated using the straight-line method over three years with no salvage value. Pretax financial income and taxable income are as follows: 2017 2018 2019 Pretax financial income $281,000 $272,000 $312,000 Taxable income 206,000 272,000 387,000 The temporary difference between pretax financial income and taxable income is due to the use of accelerated depreciation for tax purposes.

Prepare the journal entries to record income taxes for all three years (expense, deferrals, and liabilities) assuming that the enacted tax rate applicable to all three years is 35%.

Prepare the journal entries to record income taxes for all three years (expense, deferrals, and liabilities) assuming that the enacted tax rate as of 2017 is 35% but that in the middle of 2018, Congress raises the income tax rate to 40% retroactive to the beginning of 2018.