The records for Bosch Co. show this data for 2021:

• Gross profit on installment sales recorded on the books was $480,000. Gross profit from collections of installment receivables was $320,000.
• Life insurance on officers was $3,800.
• Machinery was acquired in January for $300,000. Straight-line depreciation over a tenyear life (no salvage value) is used. For tax purposes, MACRS depreciation is used and Bosch may deduct 14% for 2021.
• Interest received on tax-exempt Iowa State bonds was $9,000.
• The estimated warranty liability related to 2021 sales was $21,600. Repair costs under warranties during 2021 were $13,600. The remainder will be incurred in 2022.
• Pretax financial income is $700,000. The tax rate is 20%.

Instructions

1. Prepare a schedule starting with pretax financial income and compute taxable income.
2. Prepare the journal entry to record income taxes for 2021.