Sherrod, Inc., reported pretax accounting income of $88 million for 2018. The following information relates to differences between pretex accounting income and taxable income: 4. Income from installment sales of properties included in pretax accounting income in 2018 exceeded that reported for tax purposes by $7 million. The installment receivable account at year-end had a balance of $8 million (representing portions of 2017 and 2018 installment sales). expected to be collected equally in 2019 and 2020. b. Sherrod was assessed a penalty of $3 million by the Environmental Protection Agency for violation of a federal law in 2018. The fine 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 $96 million. Depreciation is reported by the straight-line method assuming a four-year useful life. On the tax return, deductions for depreciation will be more than straight-line depreciation the first two years but less than straight-line depreciation the next two years ($ in millions) Incore Statement Tax Return Difference $ (7) (za 2018 2019 282e d Warranty expense of $4 million is reported in 2018. For tax purposes, the expense is deducted when costs are incurred, S3 million in 2018. At December 31, 2018, the warranty lisbility was 53 million (after adjusting entries. The balance was $2 million at the end of 2017. e. In 2018, Sherrod accrued an expense and related liability for estimated paid future absences of $13 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 $7 million in 2019; $6 million in 2020). f During 2017, accounting income included an estimated loss of $2 million from having accrued a 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 $1.6 million and $3.2 million, respectively. The enacted 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. Required 1 Required 2 Required 3 Determine the amounts necessary to record income taxes for 2018 and prepare the appropriate journal entry. (If no entry is required for a transaction/event, select "No journal entry required in the first account field. Enter your answers in millions rounded to 1 decimal place (ie., 5.500,000 should be entered as 5.5).) View transaction ist Journal entry worksheet Record 2018 income taxes. Note: Enter debits before credits. Event General Journal Debit Credit Record entry Clear entry View general Journal Sherrod, Inc., reported pretax accounting income of $88 million for 2018. The following information relates to differences between pretex accounting income and taxable income: a. Income from installment sales of properties included in pretex accounting income in 2018 exceeded that reported for tax purposes by $7 million. The installment receivable account at year-end had a balance of $8 million (representing portions of 2017 and 2018 installment soles). expected to be collected equally in 2019 and 2020. b. Sherrod was assessed a penalty of $3 million by the Environmental Protection Agency for violation of a federal law in 2018. The fine 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 $96 million. Depreciation is reported by the straight-line method assuming a four-year useful life. On the tax return, deductions for depreciation will be more than straight-line depreciation the first two years but less than straight-line depreciation the next two years ($ in millions Income Statement Tax Return $ 31 Difference $ (7) 2017 2018 2019 2020 d. Warranty expense of $4 million is reported in 2018. For tax purposes, the expense is deducted when costs are incurred, S3 million in 2018. At December 31, 2018, the warranty liability was S3 million (after adjusting entries. The balance was $2 million at the end of 2017. e. In 2018, Sherrod accrued an expense and related liability for estimated paid future absences of $13 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 $7 million in 2019; $6 million in 2020). f During 2017, accounting income included an estimated loss of $2 million from having accrued a loss contingency. The loss is paid in 2018 at which time it is tax deductible. Balonces in the deferred tax asset and deferred tax liability accounts at January 1, 2018, were $1.6 million and $3.2 million, respectively. The enacted tax rate is 40% esch 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. 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 5.5)) Net income for 2018 million Required 1 Required 3 > Sherrod, Inc., reported pretax accounting income of $88 million for 2018. The following information relates to differences between pretex accounting income and taxable income a. Income from installment sales of properties included in pretax accounting income in 2018 exceeded that reported for tax purposes by S7 million. The installment receivable account at year-end had a balance of $8 million (representing portions of 2017 and 2018 installment sales). expected to be collected equally in 2019 and 2020. b. Sherrod was assessed a penalty of $3 million by the Environmental Protection Agency for violation of a federal law in 2018. The fine 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 $96 million. Depreciation is reported by the straight-line method assuming a four-year useful life. On the tax return, deductions for depreciation will be more than straight-line depreciation the first two years but less than straight-line depreciation the next two years ($ in millions Income Statement Tax Return Difference $ (7) 2017 2013 (20) 282e d Warranty expense of $4 million is reported in 2018. For tax purposes, the expense is deducted when costs are incurred, S3 million in 2018. At December 31, 2018, the warranty liability was S3 million (after adjusting entries. The balance was $2 million at the end of 2017. e. In 2018. Sherrod sccrued an expense and related liability for estimated paid future absences of $13 million relating to the company's new paid vacation program. Future compensation will be deductible on the tax return when actually paid during the next two years ($ 7 million in 2019; $6 million in 2020). f During 2017, accounting income included an estimated loss of $2 million from having accrued a 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 $1.6 million and $3.2 million, respectively. The enacted tax rate is 40% esch 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. Required 1 Required 2 Required 3 Show how any deferred tax amounts should be classified and reported in the 2018 balance sheet. (Enter your answers in millions rounded to I decimal place (ie., 5,500,000 should be entered as 5.5).) Deferred tax amounts (sin millions) Classification Amount