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Button Company has the following two temporary differences between its income tax expense and income...

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Accounting

Button Company has the following two temporary differences between its income tax expense and income taxes payable.

2014 2015 2016
Pretax Financial income $850,700 $925,800 $955,300
Excess depreciation expense on tax return (34,000) (42,800) (24,700)
Excess warranty expense in financial income 24,600 12550 8530
taxable income $841,300 $895,550 $939,130

The income tax rate for all years is 40%.

a. Prepare the journal entry to record income tax expense, deferred income taxes, and income tax payable for 2014, 2015, and 2016

b. Assuming there were no temporary differences prior to 2014, indicate how deferred taxes will be reported on the 2016 balance sheet. Buttons product warranty is for 12 months.

c. Prepare the income tax expense section of the income statement for 2016, beginning with the line Pretax financial income.

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