On february 1, 2018, arrow construction company entered into a three-year construction contract to build a bridge for a price of $8,180,000. during 2018, costs of $2,060,000 were incurred with estimated costs of $4,060,000 yet to be incurred. billings of $2,560,000 were sent, and cash collected was $2,310,000. in 2019, costs incurred were $2,560,000 with remaining costs estimated to be $3,690,000. 2019 billings were $2,810,000 and $2,535,000 cash was collected. the project was completed in 2020 after additional costs of $3,860,000 were incurred. the company's fiscal year-end is december 31. arrow recognizes revenue over time according to percentage of completion.

Martinez company has the following two temporary differences between its income tax expense and income taxes payable. 2017 2018 2019 pretax financial income $873,000 $866,000 $947,000 (2017' 2018, 2019) excess depreciation expense on tax return (29,400 ) (39,000 ) (9,600 ) (2017' 2018, 2019) excess warranty expense in financial income 20,000 9,900 8,300 (2017' 2018, 2019) taxable income $863,600 $836,900 $945,700(2017' 2018, 2019) the income tax rate for all years is 40%. instructions: a. prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2017, 2018, and 2019. b. assuming there were no temporary differences prior to 2016, indicate how deferred taxes will be reported on the 2016 balance sheet. button's warranty is for 12 months. c. prepare the income tax expense section of the income statement for 2017, beginning with the line, "pretax financial income."