Smith Co. at the end of 2025, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows:

Pretax financial income $3,800,000

Temporary Difference 1,500,000

Temporary Difference (1,200,000)

Taxable income $ 4,100,000

Required:

a. Write the journal entry for 2025 income taxes if tax rates are 30%

b. Write the journal entry for 2025 income taxes if current tax rates are 30% and enacted future rates are 20%

c. From your answer in part b. Smith assumes 70% of its deferred tax asset is more likely than not to be unrealized. Write the journal entry required for this determination.

d. Assume the "temporary" differences above were permanent differences instead. Write the journal entry for 2025 income taxes.