Minlows income statement included $130,000 accrued warranty expense that will be deducted for tax purposes when paid. On its Year 1 income tax return, Minlow reported depreciation of $700,000. For Year 1, Minlow reported depreciation of $225,000 in its income statement. Minlows enacted tax rates are 35% for Year 1 and Year 2, and 30% for Year 3 and Year 4. The depreciation difference and warranty difference will reverse over the next three years as follows:

	Depreciation difference	Warranty expense
Year 2	200,000	70,000
Year 3	175,000	40,000
Year 4	100,000	20,000
Total	475,000	130,000

These were Minlow's only temporary differences. In Minlow's Year 1 income statement, the deferred portion of its provision for income taxes should be:

• A.

  $195,000

• B.

  $103,500

• C.

  $110,000

• D.

  $120,750