Recording Multiple Temporary Differences, Multiple Tax Rates

On December $31,$ Colgait Inc. had an installment sale receivable balance of $$180,000$ recognized on its financial statements, while the amount was not recognized for tax purposes. Colgait Inc. also had a warranty accrual of $$40,000$ on December $31$ that is not deductible for tax purposes. The installment receivable will be settled equally over the next three years. The warranty will be settled equally over the next two years. Taxable income for the current year was $$1,000,000.$ Enacted tax rates are $25\%$ for the current and next year, and $30\%$ for years thereafter.

Required

a$.$ Prepare schedules to compute the deferred tax balances on December $31.$

$$Note: Do not use negative signs with your answers.

Accounts receivable Year $2$ Year $3$ Year $4$ Total

Reversal of difference between GAAP and tax bases Answer

$0$

Answer

$0$

Answer

$0$

$0$

Tax rate Answer

$25$

Answer

$30$

Answer

$30$

Answer

Answer

$0$

Answer

$0$

Answer

$0$

$0$

Warranty liability Year $2$ Year $3$ Year $4$ Total

Reversal of difference between GAAP and tax bases Answer

$0$

Answer

$0$

Answer

$0$

$0$

Tax rate Answer

$0$

Answer

$0$

Answer

$0$

Answer

Answer

$0$

Answer

$0$

Answer

$0$

$0$

b$.$ Prepare the current year journal entry to record income tax expense, assuming zero beginning balances in deferred tax accounts.

$$Note: If a line in a journal entry isn't required for the transaction, select $"$N$/$A$"$ as the account names and leave the Dr$.$ and Cr$.$ answers blank $($zero$).$

Date Account Name Dr$.$ Cr$.$

Dec. $31,$ Year $1$

$0$

$0$

Answer

$0$

$0$

Answer

$0$

$0$

Answer

$0$

$0$

Answer

To record income tax expense