Sherrod, Inc., reported pretax accounting income of $$76$ million for $2021.$ The following information relates to differences between pretax accounting income and taxable income:a$.$ Income from installment sales of properties included in pretax accounting income in $2021$ exceeded that reported for tax purposes by $$3$ million. The installment receivable account at year$-$end $2021$ had a balance of $$7$ million $($representing portions of $2020$ and $2021$ installment sales$),$ expected to be collected equally in $2022$ and $2023.$b$.$ Sherrod was assessed a penalty of $$2$ million by the Environmental Protection Agency for violation of a federal law in $2021.$ The fine is to be paid in equal amounts in $2021$ and $2022.$c$.$ Sherrod rents its operating facilities but owns one asset acquired in $2020$ at a cost of $$80$ million.Depreciation is reported by the straight$-$line method, assuming a four$-$year useful life. On the tax return, deductions for depreciation will be more than straight$-$line depreciation the first two years but less than straight$-$line depreciation the next two years $($$ in millions$)$:$2020202120222023$Income Statement$$20202020$$$80$Tax Return$$2635127$$$80$Difference$ $(6)(15)813$$ $0$d$.$ For tax purposes, warranty expense is deducted when costs are incurred. The balance of the warranty liability was $$2$ million at the end of $2020.$ Warranty expense of $$4$ million is recognized in the income statement in$2021.$ $$3$ million of cost is incurred in $2021,$ and another $$3$ million of cost anticipated in $2022.$ At December$31,2021,$ the warranty liability is $$3$ million $($after adjusting entries$).$e$.$ In $2021,$ Sherrod accrued an expense and related liability for estimated paid future absences of $$7$ million relating to the company's new paid vacation program. Future compensation will be deductible on the tax return when actually paid during the next two years $($$$4$ million in $2022$; $$3$ million in $2023).$f$.$ During $2020,$ accounting income included an estimated loss of $$2$ million from having accrued a loss contin$-$gency. The loss is paid in $2021,$ at which time it is tax deductible.Balances in the deferred tax asset and deferred tax liability accounts at January $1,2021,$ were $$1$ million and $$2\mathrm{.}5$ million, respectively. The enacted tax rate is $25\%$ each year.Required:$1.$ Determine the amounts necessary to record income taxes for $2021,$ and prepare the appropriate journalentry$\mathrm{.}2.$ What is the $2021$ net income?$3.$ Show how any deferred tax amounts should be classified and reported in the $2021$ balance sheet.