1 (25 points) Lane's first year of operations was 2013. In 2013 Lane had the following temporary differences Excess tax depreciation Sales on account in excess of cash collections The following information relates to the year ended December 31, 2014: 75,000 45,000 .. Pretax accounting income Excess tax depreciation Cash collections in excess of sales on account Accrued salaries in excess of salaries paid The enacted income tax rate is 30% for all years. $500,000 60,000 20,000 15,000 1. Temporary differences related to depreciation will reverse out by $40,000 in 2015 and $95,000 in 2016 2. Temporary differences related to A/R are expected to reverse out the following year. 3. Temporary differences related to accrued salaries are expected to reverse out the following year. Instructions a. Prepare the journal entry to record income tax expense, deferred taxes, and the income taxes payable for 2014. b. At the end of 2014, what is the cumulative temporary difference related to deferred tax liabilities? c. At the end of 2014, what is the balance of any deferred tax liabilities? d. At the end of 2014, what is the cumulative temporary difference related to deferred tax assets? e. At the end of 2014, what is the balance of any deferred tax assets? Problem 2 (25 points) On January 1, 2020, Foley Company (as lessor) entered into a noncancelable lease agreement with Pinkley Company for machinery which was carried on the accounting records of Foley at $4,800,000 and had a fair value of $4,800,000. Minimum lease payments under the lease agreement which expires on December 31, 2029, total $7,100,000. Payments of $710,000 are due each January 1. The first payment was made on January 1, 2020 when the lease agreement was finalized. 564,000 /142.000 The interest rate of 10% which was stipulated in the lease agreement is the implicit rate set by the lessor. The effective interest method of amortization is being used. Pinkley expects the machine to have a ten-year life with no salvage value, and be depreciated on a straight- line basis. Collectibility of the rentals is reasonably predictable, and there are no important uncertainties surrounding the costs yet to be incurred by the lessor. The present value of the minimum lease payments is $4,800,000. Required (a) Record all necessary journal entries for Pinkley Company for 2029 (b) Record all necessary journal entries for Foley Company for 2020 of 710,000 Paymen 142000 Intrust 568000 fm. Interest Rak