3 Sherrod, Inc., reported pretax accounting income of $96 million for 2018. The following information relates to differences between pretax accounting income and taxable income: a Income from instalment sales of properties included in pretax accounting income in 2018 exceeded that reported for tax purposes by $7 milion. The installment receivable account at year-end had a balance of $8 million (representing portions of 2017 and 2018 b. Sherrod was assessed a penalty of $2 million by the Environmental Protection Agency for violation of a federal law in 2018. The tine c Sherrod rents its operating facilities but owns one asset acquired in 2017 at a cost of $112 million. Depreciation is reported by the installment sales), expected to be collected equally in 2019 and 2020 is to be paid in equal amounts in 2018 and 2019 straight-line method assuming a four-year useful life. On the tax return, deductions for depreciation will be more than straight-ine depreciation the first two years but less than straight-line depreciation the next two years ($ in millions) 3 36 47 2018 2019 2020 28 28 19) 132 d Warranty expense of $5 million is reported in 2018. For tax purposes, the expense is deducted when costs are incurred, $3 milion e In 2018, Sherrod accrued an expense and related liability for estimated paid future absences of $14 milion relating to the company's t During 2017, accounting income included an estimated loss of $4 million from having accrued a loss contingency The loss is paid in 2018. At December 31, 2018, the warranty liability was $3 million (after adjusting entries) The balance was S1 million at the end of 2017 new paid vacation program Future compensation will be deductible on the tax return when ectualy paid during the next two years $8 million in 2019; $6 million in 2020) 2018 at which time it is tax deductible in 2018. At December 31, 2018, the warranty liability was $3 million (after adjusting entries). The balance was $1 million at the end of 2017 e. In 2018, Sherrod accrued an expense and related liability for estimated paid future absences of $14 million relating to the company's new paid vacation program. Future compensation will be deductible on the tax return when actually paid during the next two years ($8 million in 2019; $6 million in 2020) f. During 2017, accounting income included an estimated loss of $4 million from having accrued a loss contingency. The loss is paid in 2018 at which time it is tax deductible. Balances in the deferred tax asset and deferred tax liability accounts at January 1, 2018, were $2.0 million and $3.6 million, respectively. The enacted tax rate is 40% each year. Required 1. Determine the amounts necessary to record income taxes for 2018 and prepare the appropriate journal entry 2. What is the 2018 net income? 3. Show how any deferred tax amounts should be classified and reported in the 2018 balance sheet