Reference no: EM132960755

At the end of its first year of operation, 2022, Zangief Corp., a company that specializes in storage and organization products, Monsanto Co. at the end of 2022, prepared a reconciliation between pretax financial income and taxable income as follows:

Pretax financial income $ 600,000
Estimated litigation expense 1,500,000
Installment sales (1,200,000)
Taxable income $ 900,000

The estimated litigation expense of $1,500,000 will be deductible in 2024 when it is expected to be paid. The gross profit from the installment sales will be realized in the amount of $600,000 in each of the next two years. The installment accounts receivable are classified as $600,000 current and $600,000 noncurrent on the balance sheet. The income tax rate is 30% for all years.

Problem 1: Prepare the appropriate journal entry.