The differences between the book basis and tax basis of the assets and liabilities of Pharoah Corporation at the end of 2016 are presented below.

It is estimated that the litigation liability will be settled in 2017. The difference in accounts receivable will result in taxable amounts of $32,400 in 2017 and $15,800 in 2018. The company has taxable income of $384,000 in 2016 and is expected to have taxable income in each of the following 2 years. Its enacted tax rate is 34% for all years. This is the companys first year of operations. The operating cycle of the business is 2 years.

(a) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2016. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Tax Basis Book Basis $48,200 27,200 Accounts receivable Litigation liability $0 0 Account Titles and Explanation Debit Credit