Deferred Taxes and income Tax Payable c. Record the income tax journal entry on December 31 of Year 1. d. Record the income tax journal entry on December 31 of Year 2. Deferred Taxes and Income Tax Payable a. Prepare schedules to compute the deferred tax balances on December 31 of Year 1. - Note: Do not use negative signs with your answers. b. Compute the increase to income tax payable on December 31 of Year 1 and Year 2. Please answer all parts of the question. Recording and Reporting Multiple Differences Condensed income statements for Prince Inc. for Year 1 and Year 2 follow. Additional information - Environmental fines are not deductible for income tax purposes. - Amount collected in Year 1 related to deferred service revenue ($10,000) was taxable in Year 1 . - Accrued warranty costs of $8,000 are not deductible for income tax purposes until Year 2 when the expenditures are made. - Income tax rate is 25% for both years. - At the beginning of Year 1, deferred tax asset and liability balances were zero. e. Show how the tax accounts would be reported on the income statement and balance sheet (excluding income taxes payable) for Year 1 and Year 2 . Include the disclosure of current and deferred tax expense. - Note: Do not use negative signs with your answers. Deferred Taxes and income Tax Payable c. Record the income tax journal entry on December 31 of Year 1. d. Record the income tax journal entry on December 31 of Year 2. Deferred Taxes and Income Tax Payable a. Prepare schedules to compute the deferred tax balances on December 31 of Year 1. - Note: Do not use negative signs with your answers. b. Compute the increase to income tax payable on December 31 of Year 1 and Year 2. Please answer all parts of the question. Recording and Reporting Multiple Differences Condensed income statements for Prince Inc. for Year 1 and Year 2 follow. Additional information - Environmental fines are not deductible for income tax purposes. - Amount collected in Year 1 related to deferred service revenue ($10,000) was taxable in Year 1 . - Accrued warranty costs of $8,000 are not deductible for income tax purposes until Year 2 when the expenditures are made. - Income tax rate is 25% for both years. - At the beginning of Year 1, deferred tax asset and liability balances were zero. e. Show how the tax accounts would be reported on the income statement and balance sheet (excluding income taxes payable) for Year 1 and Year 2 . Include the disclosure of current and deferred tax expense. - Note: Do not use negative signs with your answers