Pretax accounting income is $206,000. Depreciation for tax is $111,000; depreciation for accounting is $29,000. Bad debt expense for tax is $12,000; bad debt expense for accounting is $9000. A fine for pollution of a river was imposed by the state of Kentucky for $7000. The tax rate is 20%.

1. Taxable income is

1. $292,000
2. $128,000
3. $114,000
4. $134,000

2. The deferred tax liability is

1. Increased by 82,000 x .20
2. Reduced by $111,000 x .20
3. Increased by $29,000 x .20
4. Reduced by $82,000 x .20

3. The deferred tax asset is

1. Increased by $3000 x .20
2. Increased by $9000 x .20
3. Decreased by $12,000 x .20
4. Decreased by $3000 x .20