Sherrod, Inc., reported pretax accounting income of $92 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 $6 million The installment receivable account at year-end 2021 had a balance of $8 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 $3 million by the Environmental Protection Agency for violation of a federat tow 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 $104 million Depreciation is reported by the straight-line method, assuming a four-year useful life. On the tax return, deductions for depreciation will be more than straight line depreciation the first two years but less than straight-line depreciation the next two years ($ in millions): Inco Statement Tax Return ofference 520 $ 34 5 (8) (19) 16 12 5104 2020 2021 2022 2023 45 26 26 26 $184 10 9 50 d. For tax purposes, warranty expense is deducted when costs are incurred. The balance of the warranty liability was $1 million at the end of 2020. Warranty expense of $3 million is recognized in the income statement in 2021 $2 million of cost is incurred in 2021 and another $3 million of cost anticipated in 2022. At December 31, 2021, the warranty liability is $2 million (after adjusting entries) e. In 2021. Shertod 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 2022; $6 million in 2023) 1. During 2020, accounting income included an estimated loss of $6 million from having accrued a loss contingency. The loss is paid in 2021, at which time it is tax deductible Journal entry worksheet