WORM Company had 2007 taxable income of $60,000 which included the following: Bad debt expense (allowance for financial, direct write-off for tax) difference of $6,000 Depreciation (straight-line for financial, MACRS for tax, first year) difference of $14,000 Fines of $5,000 Net operating loss carried forward from 2004 of $20,000 Installment sales (accrual basis for financial, installment basis for tax, year of sale) $24,000 difference Rent received in 2007 to be earned in 2008 $9,000 (none received in 2006 and earned in 2007).
[a] Calculate pretax financial income
[b] What is the journal entry to record income tax expense and income tax payable for 2007? Ignore estimated tax payments and underpayment penalties