Ewing Company sells household furniture. Customers who purchase furniture on the installment basis make payments in equal monthly installments over a two-year period, with no down payment required. Ewing's gross profit on installment sales equals 40% of the selling price of the furniture.

For financial accounting purposes, sales revenue is recognized at the time the sale is made. For income tax purposes, however, the installment method is used. There are no other book and income tax accounting differences, and Ewing's income tax rate is 30%.

If Ewing's December 31, 2015, balance sheet includes a deferred tax liability of $600,000 arising from the difference between book and tax treatment of the installment sales, it should also include installment accounts receivable of

a. $5,000,000.

b. $2,000,000.

c. $1,500,000.

d. $450,000.

why choose A

Use the following information for questions 73 and 74.

Kraft Company made the following journal entry in late 2014 for rent on property it leases to Danford Corporation.

Cash 120,000

Unearned Rent Revenue 90,000

The payment represents rent for the years 2015 and 2016, the period covered by the lease. Kraft Company is a cash basis taxpayer. Kraft has income tax payable of $184,000 at the end of 2014, and its tax rate is 35%.

73. What amount of income tax expense should Kraft Company report at the end of 2014?

a. $106,000

b. $142,000

c. $163,000

d. $226,000

why choose B

74. Assuming the income taxes payable at the end of 2015 is $204,000, what amount of income tax expense would Kraft Company record for 2015?

a. $162,000

b. $183,000

c. $225,000

d. $246,000

why choose C