Multiple Choice Question 77

At the beginning of 2018; Crane, Inc. had a deferred tax asset of $14000 and a deferred tax liability of $24000. Pre-tax accounting income for 2018 was $1380000 and the enacted tax rate is 40%. The following items are included in Cranes pre-tax income:

Interest income from municipal bonds	$108000
Accrued warranty costs, estimated to be paid in 2019	$248000
Operating loss carryforward	$178000
Installment sales profit, will be taxed in 2019	$118000
Prepaid rent expense, will be used in 2019	$54000

Which of the following is required to adjust Crane, Inc.s deferred tax asset to its correct balance at December 31, 2018?

A credit of $99200

A credit of $79600

A debit of $85200

A debit of $79600