Olympus Motors, Inc., computed a pretax financial income of $90,000 for its first year of operations ended December 31, 2015. In preparing the income tax return for the year, the tax accountant determined the following differences between 2015 financial income and taxable income.

Nondeductible expenses	$25,000
Nontaxable revenues	15,500
Temporary differenceinstallment sales reported in financial income but not in taxable income	32,000

The temporary difference is expected to reverse in the following pattern as the cash is collected:

2016	$ 7,000
2017	16,500
2018	8,500
Total	$32,000

The enacted tax rates for this year and the next three years are as follows:

2015	40%
2016	35
2017	33
2018	30

Instructions:

• 1. Prepare journal entries to record income taxes payable and deferred income taxes.
• 2. Prepare a partial income statement for Olympus Motors beginning with Income from continuing operations before income taxes for the year ended December 31, 2015.