On December 31, 2009, Loran Corporation reported a deferred tax liability totaling $12,000, resulting from depreciation timing differences pertaining to a depreciable asset purchased during 2009. Loran uses straight-line depreciation over four years for GAAP (book) purposes; for tax purposes, the depreciation deduction is 40% of cost during 2009, 30% of cost during 2010, 20% of cost during 2011, and 10% of cost during 2012. During 2010, Loran expensed $80,000of warranty costs that will be deducted for tax purposes in future years. Loran also accrued revenue totaling $135,000 which is taxable in 2011. Lorans GAAP (book) income before taxes during 2010 totaled $380,000. The marginal income tax rate is 40% for all years.

Required:

(1) What is the taxable income?

(2) Prepare the journal entry to record income tax expense for the year ended December 31, 2010.