The information that follows pertains to Esther Food Products:a. At December 31, 2018, temporary differences were associated with the following future taxable (deductible)amounts:Depreciation $ 60,000Prepaid expenses 17,000Warranty expenses (12,000)b. No temporary differences existed at the beginning of 2018.c. Pretax accounting income was $80,000 and taxable income was $15,000 for the year ended December 31,2018.d. The tax rate is 40%.Required:Determine the amounts necessary to record income taxes for 2018, and prepare the appropriate journal entry.

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Deferred Tax

Deferred tax is an estimated future tax which is made while preparing accounts. It is estimated as a result of past and present transactions in the financial statements. It is not the actual tax which needs to be paid or refundable from the revenue authority, it is an accounting entry. It exists because of the difference between accounting profits and taxable profits.