Sherrod, Inc., reported pretax accounting income and taxable income: pretax accounting income of $98 million for 2018. The following information relates to differences between Income from installment sales of properties included in pretax accounting income in 2018 exceeded that reported for tax purposes by $9 million. The installment receivable account a installment sales), expected to be collected equally in 2019 and 2020. a. t year-end had a balance of $10 million (representing portions of 2017 and 2018 b. Sherrod was assessed a penalty of $3 million by the Environmental Protection Agency for violation of a federal law in 2018. The fin is to be paid in equal amounts in 2018 and 2019. c. Sherrod rents its operating facilities but owns one asset acquired in 2017 at a cost of $116 million. Depreciation is reported by the straight-line method assuming a four-year useful life. On the tax return, deductions for depreciation will be more than straight-line depreciation the first two years but less than straight-line depreciation the next two years ($ in millions): Tax Return 2017 2018 2019 2020 s 29 29 29 29 $116 Difference (21) 21 $ 38 50 20 $116 d. Warranty expense of $5 million is reported in 2018. For tax purposes, the expense is deducted when costs are incurred, $3 million end o in 2018. At December 31, 2018, the warranty liability was $3 million (after adjusting entries). The balance was $1 million at the 2017 e. In 2018, Sherrod accrued an expense and rela ted liability for estimated paid future absences of $15 million relating to the id vacation program. Future compensation will be deductible on the tax return when actually paid during the two years ($10 million in 2019; $5 million in 2020). f. During 2017, accounting income included an estimated loss of $6 million from having accrued a loss contingency. T 2018 at which time it is tax deductible. Ralancoe in the deferrod tav ace K Prev2 of 2Next ax accounting income of $98 million for 2018. The following information relates to differences betweern pretax accounting income and taxable income: ivable account at year-end had a balance of $10 million (representing portions of 2017 and 2018 b. Sherrod was assessed a penalty of $3 million by the Environmental Protection Agency for violation of a federal law in 2018. The fin Income from installment sales of properties included in pretax accounting income in 2018 exceeded that reported for tax purp by $9 million. The installment recei installment sales), expected to be collected equally in 2019 and 2020. is to be paid in equal amounts in 2018 and 2019. Sherrod rents its operating facilities but owns one asset acquired in 2017 at a cost of $116 million. Depreciation is reported by the straight-line method assuming a four-year useful life. On the tax return, deductions for depreciation will be more than straight-line depreciation the first two years but less than straight-line depreciation the next two years ($ in millions): 2017 2018 2019 2020 s 29 29 29 29 $116 Difference s (9) (21) 38 50 20 21 $116 d. Warranty expense of $5 million is reported in 2018. For tax purposes, the expense is deducted when costs are incurred, $3 million in 2018. At December 31, 2018, the warranty liability was $3 million (after adjusting entries). The balance was $1 million at the end o 2017 e. In 2018, Sherrod accrued an expense and rel ated liability for estimated paid future absences of $15 million relating to the id vacation program. Future compensation will be deductible on the tax return when actually paid during the two years ($10 million in 2019; $5 million in 2020). t. During 2017, accounting income included an estimated loss of $6 million from having accrued a loss contingency 2018 at which time it is tax deductible. 4 R millian and SAn millian Ralancoe in the deferrod tav ace KPrey 2 of 2 Next Balances in the deferred tax asset and deferred tax liability accounts at January 1, 2018, were $2.8 million and $4.0 million. respectively. Theenacted tax rate is 40% each year. Required: 1. Determine the amounts necessary to record income taxes for 2018 and prepare the appropriate journal entry 2. What is the 2018 net income? 3. Show how any deferred tax amounts should be classified and reported in the 2018 balance sheet. Complete this question by entering your answers in the tabs below. for Determine the amounts necessary to record income taxes for 2018 and prepare the appropriate journal entry. (If no entry is a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).) Journal entry worksheet Record 2018 income taxes. K Prex 2 of 2 Next t Check company s new paa vacauon program. Future compensauon will ve ueaucupie on une tax r two years ($10 million in 2019; $5 million in 2020). f During 2017, ting income included an estimated loss of $6 million from having accrued a loss loss contingency. The loss is paid in 2018 at which time it is tax deductible. Balances in the deferred tax asset and deferred tax liability accounts at January 1, 2018, were $2.8 million and $4.0 respectively. The enacted tax rate is 40% each year. million, Required: 1. Determine the amounts necessary to record income taxes for 2018 and prepare the appropriate journal entry 2. What is the 2018 net income? 3. Show how any deferred tax amounts should be classified and reported in the 2018 balance sheet Complete this question by entering your answers in the tabs below Required 1 Required 2 Required 3 What is the 2018 net income? (Enter your answer in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as for 2018 1. Determine the amounts necessary to record income taxes for 2018 and prepare the appropriate journal entry 2. What is the 2018 net income? 3. Show how any deferred tax amounts should be classified and reported in the 2018 balance sheet. Complete this question by entering your answers in the tabs below. Show how any deferred tax amounts should be classified and reported in the 2018 balance sheet. (Enter your answers in millions rou as 5.5).) nded to 1 decimal place (i.e., 5,500,000 should be e tax amounts ($ in millipns) Amount Next K Prex 2 of 2