The following information has been obtained for Crane Corporation. 1. Prior to 2025, taxable income and pretax financial income were identical. 2. Pretax financial income is $1,564,000 in 2025 and $1,423,000 in 2026. 3. On January 1, 2025, equipment costing $1,292,000 is purchased. It is to be depreciated on a straight-line basis over 5 years for tax purposes and over 8 years for financial reporting purposes. (Hint: Use the half-year convention for tax purposes, as discussed in Appendix 10A.) 4. Interest of $63,000 was earned on tax-exempt municipal obligations in 2026. 5. Included in 2026 pretax financial income is a gain on discontinued operations of $197,000, which is fully taxable. 6. The tax rate is 20% for all periods. 7. Taxable income is expected in all future years. (a) Your answer is correct. Compute taxable income and income taxes payable for 2026. Taxable income Income taxes payable LA CA $ 1,263,100 252620 (b) Prepare the journal entry to record 2026 income tax expense, income taxes payable, and deferred taxes. (List all debit entries before credit entries. 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 O for the amounts.) Account Titles and Explanation Income Tax Expense Debit Credit Income Tax Payable Deferred Tax Liability Deferred Tax Asset 252620