Response to the following problem:
Integrated Systems, Inc., recognized service revenue of $300,000 on its financial statements in 2007. Assume, however, that the Tax Code requires this amount to be recognized for tax purposes in 2008. The taxable income for 2007 and 2008 is $2,000,000 and $2,500,000, respectively. Assume a tax rate of 40%.
Prepare the journal entries to record the tax expense, deferred taxes, and taxes payable for 2007 and 2008, respectively.