(Three Differences, Multiple Rates, Future Taxable Income) During 2010, Graham Co.’s first year of operations, the company reports pretax financial income of $250,000. Graham’s enacted tax rate is 40% for 2010 and 35% for all later years. Graham expects to have taxable income in each of the next 5 years. The effects on future tax returns of temporary differences existing at December 31, 2010, are summarized below.
(a) Complete the schedule below to compute deferred taxes at December 31, 2010.
(b) Compute taxable income for 2010.
(c) Prepare the journal entry to record income tax payable, deferred taxes, and income tax expense for2010.