Popeyes Development began operations in December 2013. When lots for industrial development are sold, Popeyes recognizes income for financial reporting purposes in the year of the sale. For some lots, Popeyes recognizes income for tax purposes when collected. Income recognized for financial reporting purposes in 2013 for lots sold this way was $59 million which will be collected over the next three years. Scheduled collections for 2014-2016 are as follows:

2014 : 18M

2015: 25M

2016: 16 M

Total: 59M

Pretax accounting income for 2013 was $108 million. The enacted tax rate is 40 percent.

Required: 1. Assuming no differences between accounting income and taxable income other than those described above, prepare the schedule, as shown in the text and journal entry to record income taxes in 2013.

2. Suppose a new tax law, revising the tax rate from 40% to 35%, beginning in 2015, is enacted in 2014, when pretax accounting income was $75 million. Prepare the appropriate journal entry to record income taxes in 2014.

3. If the new tax rate had not been enacted, what would have been the appropriate journal entry to record income taxes in 2014?