1. A reconciliation of Sauder Company's pretax accounting income with its taxable income for 2014, its first year of operations, is as follows: Pretax accounting income $8,000,000 less Excess tax depreciation (240,000) =Taxable income $7,760,000

The excess tax depreciation will result in equal net taxable amounts in each of the next three years. Enacted tax rates are 40% in 2014, 35% in 2015 and 2016, and 30% in 2017.

Required:

(a) Compute the total deferred tax liability to be reported on Sauder's balance sheet at December 31, 2014.

(b) Create the journal entry required at December 31, 2014 to record tax expense.

This is the solution I just want the information of how the professor got the numbers

1.(a)

	2014	2015	2016	2017	Total
	(240,000)	80,000	80,000	80,000	0
Tax Rate	0.40	0.35	0.35	0.30
DTL		28,000	28,000	24,000	80,000
	7,760,000
Tax Payable	3,104,000
(b)
Journal Entry			Dr.	Cr.
Tax Expense			3,184,000
	Taxes Payable			3,104,000
	Deferred Tax Liability			80,000