2011 During 2011, its first year of operations, Eli-Wallace Distributors reported pretax accounting income of $200 million which included the following amounts: Income (net) from installment sales of warehouses in 2011 of $9 million to be reported for tax purposes in 2012 ($5 million) and 2013 ($4 million). 2. Depreciation is reported by the straight-line method on an asset with a four-year useful life. On the tax return, deductions for depreciation will be more than straight line depreciation the first two years but less than straight-line depreciation the next two years ($ in millions): Income Statement Tax Return Difference 2011 $ 50 $ 66 $(16) 2012 (38) 2013 30 2014 16 $200 $200 50 BR 3. Estimated warranty expense that will be deductible on the tax return when actually paid during the next two years. Estimated deductions are as follows ($ in millions): Income Statement Tax Return Difference 2011 $4 3 2013 2012 During 2012, pretax accounting income of $200 million included an estimated loss of $1 million from having accrued a loss contingency. The loss is expected to be paid in 2014 at which time it will be tax deductible. The enacted tax rate is 40% each year. For 2011 and 2012 1. Prepare the income tax journal entry. 2. show the income tax expense on the Ils (3 lines) 3. Show the deterred taxes on the balance sheet. 2011 During 2011, its first year of operations, Eli-Wallace Distributors reported pretax accounting income of $200 million which included the following amounts: Income (net) from installment sales of warehouses in 2011 of $9 million to be reported for tax purposes in 2012 ($5 million) and 2013 ($4 million). 2. Depreciation is reported by the straight-line method on an asset with a four-year useful life. On the tax return, deductions for depreciation will be more than straight line depreciation the first two years but less than straight-line depreciation the next two years ($ in millions): Income Statement Tax Return Difference 2011 $ 50 $ 66 $(16) 2012 (38) 2013 30 2014 16 $200 $200 50 BR 3. Estimated warranty expense that will be deductible on the tax return when actually paid during the next two years. Estimated deductions are as follows ($ in millions): Income Statement Tax Return Difference 2011 $4 3 2013 2012 During 2012, pretax accounting income of $200 million included an estimated loss of $1 million from having accrued a loss contingency. The loss is expected to be paid in 2014 at which time it will be tax deductible. The enacted tax rate is 40% each year. For 2011 and 2012 1. Prepare the income tax journal entry. 2. show the income tax expense on the Ils (3 lines) 3. Show the deterred taxes on the balance sheet