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Installment sales are a normal part ofC $1,400,000. Income before including any of the book-tax differences above is $945,000. Deferred tax assets are expected

 

Installment sales are a normal part ofC $1,400,000. Income before including any of the book-tax differences above is $945,000. Deferred tax assets are expected to be fully realized and, as a result, no allowance account is needed. Reyami is subject to a 40% income tax rate. s operations. The depreciation expense is related to a building costing Requirement Prepare the journal entrylentries necessary to record the effects of a tax-rate reduction from 40% to 34% effective the beginning of Year 2. (Record debits first, then credits. Exclude explanations from any journal entries.) Account Year 2 (1) Deferred Tax Liability (2) Income Tax Expense (3) Deferred Tax Asset (4) 1: Data Table Source of Book-Tax Difference GAAP Tax Installment Sales Income recognized 24 514,000 $ 120,000 2-year Warranty Costs Warranty Expense 70,000 46.000 Depreciation Expense 82.000 134,000

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