Motown Corporation enters into an installment sale with Max Corporation in 20X2. Motown recognizes the sale on an accrual basis (when sale is complete) for book purposes and on an installment sale method (cash) basis for tax purposes. Facts are as follows:

Initial Year of installment sale: 20X2

Revenue Recognition

Book Tax

20X2 136,750

20X3 50%

20X4 50%

Tax Rate 20%

Book Income

20X2 $ 186,755

20X3 $ 39,427

20X4 $ 122,400

1.) Calculate taxable income for 20X2. 2.) Calculate taxes payable for 20X2. 3.) Determine the current deferred tax liability at 12/31/X2.

4.) calculate total income tax expense for 20X2. 5.) Compute net income after taxes for 20X2. 6.) Calculate taxable income for 20X3. 7.) The entry required at the end of 20X3 requires:

A. Debit to the Deferred tax liability for 7,885 $

B. Debit to the Deferred tax liability for 13,675 $

C. Debit to the Deferred tax liability for 21,560 $

D. Credit to the Deferred tax liability for 7,885 $

E. Credit to the Deferred tax liability for 13,675 $

F. Credit to the Deferred tax liability for 21,560 $

G. None of the above 8.) Compute net income after taxes for 20X3. 9.) Calculate taxable income for 20X4. 10.) Compute net income after taxes for 20X4.