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4. Horner Corporation has a deferred tax asset at December 31, 2015 of $80,000 due to the recognition of potential tax benefits of an operating loss carryforward. The enacted tax rates are as follows: 40% for 20122014; 35% for 2015; and 30% for 2016 and thereafter. Assuming that management expects that only 60% of the related benefits will actually be realized, a valuation account should be established in the amount of:

a. $80,000

b. $32,000

c. $28,000

d. $24,000

Use the following information for questions 5 and 6.

Rowen, Inc. had pre-tax accounting income of $1,672,000 and a tax rate of 40% in 2015, its first year of operations. During 2015 the company had the following transactions:

Received rent from Jane, Co. for 2016	$64,000
Municipal bond income	$80,000
Depreciation for tax purposes in excess of book depreciation	$40,000
Installment sales revenue to be collected in 2016	$108,000

5. For 2015, what is the amount of income taxes payable for Rowen, Inc?

a. $603,200

b. $654,400

c. $686,400

d. $772,800

6. At the end of 2015, which of the following deferred tax accounts and balances is reported on Rowen, Inc.s balance sheet?

Account _ Balance

a. Deferred tax asset $32,000

b. Deferred tax liability $32,000

c. Deferred tax asset $59,200

d. Deferred tax liability $59,200