Question $16$

$15$ pts

Problem $16$: $(10$ points total$)$ Use this information for parts A and $B.$

In $2016,$ Percy Company reported pretax GAAP income of $$400,000.$ During $2016,$ Percy had the following differences between GAAP and tax:

Recognized $$150,000$ installment sale revenue under GAAP in $2016.$ Starting in $2017,$ this revenue will be recognized for tax purposes in equal amounts over the next three years.

Recognized $$75,000$ depreciation in $2016$ for tax. Starting in $2017,$ GAAP depreciation is $$15,000$ per year for the next five years.

Received $$80,000$ in unearned rent revenue in $2016.$ Rent will be earned in equal amounts in $2017$ and $2018.$

The tax rate for $2016$ is $35$ percent and $40$ percent thereafter.

Required:

Part A$.(5$ points$)$ What journal entry does Percy record for taxes in $2016?$

Part B$.(5$ points$)$ Assuming that taxable income is $$500,000$ in $2017,$ what journal entry does Percy record for taxes in $2017?$