The records for Cullumber Co. show this data for 2021: Gross profit on installment sales recorded on the books was $560,000. Gross profit from collections of installment receivables was $420,000. Life insurance on officers was $5,200. Machinery was acquired in January for $440,000. Straight-line depreciation over a ten-year life (no salvage value) is used. For tax purposes, MACRS depreciation is used and Cullumber may deduct 14% for 2021. Interest received on tax exempt lowa State bonds was $10,400. The estimated warranty liability related to 2021 sales was $23,000. Repair costs under warranties during 2021 were $15,000. The remainder will be incurred in 2022. Pretax financial income is $740,000. The tax rate is 20%. . Your answer is correct. Prepare a schedule starting with pretax financial income and compute taxable income. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Schedule of Pretax Financial Income and Taxable income for 2021 Pretax Financial Income $ 740000 Permanent Differences Life Insurance 5200 Tax-exempt Interest (10,400) Temporary Differences Installment Sales 00) Extra Depreciation (17,600) Warranties 8,000 Taxable income $ 585200 (b) I Your answer is partially correct. I 1 Prepare the journal entry to record income taxes for 2021. (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 Debit Credit Income Tax Expense 117040 Deferred Tax Asset 31520 Deferred Tax Liability 31520 Income Tax Payable 117040