1. Madison had reported a deferred tax asset of $10,000 and no valuation allowance at December 31, 2021. In its December 31, 2022, balance sheet, Madison Co. had income taxes payable of $40,000 and a deferred tax asset of $15,000 before determining the need for a valuation account. No estimated tax payments were made during 2022. At December 31, 2022, Madison determined that it was more likely than not that 20% of the deferred tax asset would NOT be realized. In its 2022 income statement, what amount should Madison report as total income tax expense?

A $43,000

B $38,000

C $30,000

D $40,000

2. Premium Development began operations in December 2022. When property is sold on an installment basis, Premium recognizes installment income for financial reporting purposes in the year of the sale. For tax purposes, installment income is reported by the installment method. 2022 installment income was $640,000 and will be collected over the next three years: 2023, $160,000; 2024, $300,000; 2025, $180,000.

Premium also had product warranty costs of $120,000 expensed for financial reporting purposes in 2022. For tax purposes, only the $20,000 of warranty costs actually paid in 2022 was deducted. The remaining $100,000 will be deducted for tax purposes when paid over the next three years as follows: 2023, $25,000; 2024, $35,000; 2025, $40,000

Pretax accounting income for 2022 was $1,120,000, which includes interest revenue of $20,000 from municipal governmental bonds. The enacted tax rate is 25% for year 2022 and 30% for years 2023-2025. The amount of Premium's 2022 net income would be:

A $825,000

B $840,000

C $770,000

D $818.000