Dell began operations in January 2010, and purchased a machine for $25,000. Dell uses straight-line depreciation over a four-year period for financial reporting purposes. For tax purposes, the deduction is 50% of cost in 2010, 30% in 2011, and 20% in 2012. Pretax accounting income for 2010 was $200,000, which includes interest revenue of $24,000 from municipal bonds. The enacted tax rate is 30% for all years. There are no other differences between accounting and taxable income.
Required:
Prepare a journal entry to record income taxes for the year 2010. Show well-labeled computations for the amount of income tax payable and the change in the deferred tax account.