P19-4 (Permanent and Temporary Differences, One Rate) The accounting records of Shinault Inc. showthe following data for 2014 (its first year of operations).1. Life insurance expense on officers was $9,000.2. Equipment was acquired in early January for $300,000. Straight-line depreciation over a 5-year lifeis used, with no salvage value. For tax purposes, Shinault used a 30% rate to calculate depreciation.3. Interest revenue on State of New York bonds totaled $4,000.4. Product warranties were estimated to be $50,000 in 2014. Actual repair and labor costs related to thewarranties in 2014 were $10,000. The remainder is estimated to be paid evenly in 2015 and 2016.5. Gross profit on an accrual basis was $100,000. For tax purposes, $75,000 was recorded on the installment-sales method.6. Fines incurred for pollution violations were $4,200.7. Pretax financial income was $750,000. The tax rate is 30%.Instructions(a) Prepare a schedule starting with pretax financial income in 2014 and ending with taxable income in2014.(b) Prepare the journal entry for 2014 to record income taxes payable, income tax expense, and deferredincome taxes.

P19-4 (Permanent and Temporary Differences, One Rate) The accounting records of Shinault Inc. showthe following data for 2014 (its first year of operations).1. Life insurance expense on officers was $9,000.2. Equipment was acquired in early January for $300,000. Straight-line depreciation over a 5-year lifeis used, with no salvage value. For tax purposes, Shinault used a 30% rate to calculate depreciation.3. Interest revenue on State of New York bonds totaled $4,000.4. Product warranties were estimated to be $50,000 in 2014. Actual repair and labor costs related to thewarranties in 2014 were $10,000. The remainder is estimated to be paid evenly in 2015 and 2016.5. Gross profit on an accrual basis was $100,000. For tax purposes, $75,000 was recorded on the installment-sales method.6. Fines incurred for pollution violations were $4,200.7. Pretax financial income was $750,000. The tax rate is 30%.Instructions(a) Prepare a schedule starting with pretax financial income in 2014 and ending with taxable income in2014.(b) Prepare the journal entry for 2014 to record income taxes payable, income tax expense, and deferredincome taxes.