1. During its first year of operations, 2019, the Sears Block Company reported both a pretax financial and a taxable loss of $200,000. The income tax rate is 30% for the current and future years. Due to a sufficient backlog of sales orders, Sears Block did not establish a valuation allowance to reduce the $60,000 Deferred Tax Asset. However, early in 2020, one major customer, representing 60% of the 2019 year-end sales backlog, went bankrupt. Sears now believes that it is more likely than not that 70% of the deferred tax asset, will not realize. The entry to record the valuation allowance would be

a.	Income Tax Expense 42,000 Deferred Tax Asset 42,000
b.	Income Tax Benefit from Operating Loss Carryforward 42,000 Deferred Tax Asset 42,000
c.	Income Tax Expense 42,000 Allowance to Reduce Deferred Tax Asset to Realizable Value 42,000
d.	Allowance to Reduce Deferred Tax Asset to Realizable Value 42,000 Income Tax Expense 42,000