(1) Owl Co. had income before taxes of $800,000 and a tax rate of 30% in their first year of operation. Included in this income is $10,000 in U.S. governmental fines and penalties and depreciation expense of $150,000. The depreciation deduction on Owl's tax return is $200,000. Which of the following statements is true?

Owl's entry will include a deferred tax liability of $18,000.

Owl's entry will include an income tax expense of $240,000.

Owl's entry will include a deferred tax asset of $15,000.

Owl's entry will include an income tax payable of $228,000.

(2) Fox Co. had $200,000 in cash-basis pretax income. At year-end, accounts receivable had increased by $20,000 and accounts payable had decreased by $12,000 from their beginning year balances. Compared to the accrual basis pre-tax income, Fox's cash pretax income is:

Higher $32,000

Higher by $8,000

Lower by $8,000

Lower by $32,000