The pretax financial income of Sage Company differs from its taxable income throughout each of 4 years as follows.

Year	Pretax Financial Income	Taxable Income	Tax Rate
2017	$298,000	$181,000	35%
2018	$348,000	$237,000	40%
2019	$352,000	$262,000	40%
2020	$462,000	$558,000	40%

Pretax financial income for each year includes a nondeductible expense of $ 29,600 (never deductible for tax purposes). The remainder of the difference between pretax financial income and taxable income in each period is due to one depreciation temporary difference. No deferred income taxes existed at the beginning of 2017.

1) Prepare journal entries to record income taxes in all 4 years. Assume that the change in the tax rate to 40% was not enacted until the beginning of 2018.

Prepare the income statement for 2018, beginning with income before income taxes.