Tamarisk Corp. sold an investment on an installment basis. The total gain of $67,200 was reported for financial reporting purposes in the period of sale. The company qualifies to use the installment-sales method for tax purposes. The installment period is 3 years; one-third of the sale price is collected in the period of sale. The tax rate was 40% in 2017, and 35% in 2018 and 2019. The 35% tax rate was not enacted in law until 2018. The accounting and tax data for the 3 years is shown below.

Please assist with the last section (income statement, in red).

Kieso, Intermediate Accounting, 16e Help System Announcements CALCULATOR PRINTER VERSION BACK NEXT Problem 19-7 Tamarisk Corp. sold an investment on an installment basis. The total gain of $67,200 was reported for financial reporting purposes in the period of sale. The company qualifies to use the installment-sales method for tax purposes. The installment period is 3 years; one-third of the sale price is collected in the period of sale. The tax rate was 40% in 2017, and 35% in 2018 and 2019. The 35% tax rate was not enacted in law until 2018. The accounting and tax data for the 3 years is shown below. Financial Accounting Tax Return 2017 (40% tax rate) Income before temporary difference Temporary difference $78,400 67,200 $145,600 $78,400 22,400 $100,800 Income 2018 (35% tax rate) Income before temporary difference Temporary difference $78,400 $78,400 22,400 $100,800 Income $78,400 2019 (35% tax rate) Income before temporary difference Temporary difference $78,400 $78,400 22,400 Income $78,400 $100,800 Your answer is correct. Calculate cumulative temporary differences for years 2017-2019. 2017 2018 2019 Cumulative temporary difference nce ( 44800 22400) U Calculate current tax expense for years 2017-2019. for 2017 su 40320 Current tax expense Texpense, Current tax expense for 2018 T 35280 Current tax J for 2019 $ 35280 Calculate deferred tax expense for 2017-2019. expense 17920 Deferred tax for 2017 Deferred tax one -7840 for 2018 benefit Deferred tax for 2019 $ 7840 SHOW LIST OF ACCOUNTS SHOW SOLUTION SHOW ANSWER Your answer is correct. Prepare the journal entries to record the income tax expense, deferred income taxes, and the income taxes payable at the end of each year. No deferred income taxes existed at the beginning of 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) Date Account Titles and Explanation Debit Credit 2017 Income Tax Expense | Income Tax Payable JU58240 JUU JUL JU 2240 40320 17920 Deferred Tax Liability 2018 Deferred Tax Liability | Income Tax Expense (To record the adjustment for the decrease in the enacted tax rate.) Income Tax Expense Deferred Tax Liability | Income Tax Payable Jl 35280 (To record income taxes.) 2019 Income Tax Expense Deferred Tax Liability | 35280] JE Income Tax Payable SHOW LIST OF ACCOUNTS SHOW ANSWER LINK TO TEXT LINK TO TEXT LINK TO TEXT Kieso, Intermediate Accounting, 16e Help System Announcements CALCULATOR PRINTER VERSION BACK NEXT Your answer is correct. Show how the deferred taxes will appear on the balance sheet at the end of each year. Tamarisk Corp. Balance Sheet December 31, 2017 Non-current Liabilities Deferred Tax Liability 17920 Tamarisk Corp. Balance Sheet December 31, 2018 Non-current Liabilities Deferred Tax Liability 780 Tamarisk Corp. Balance Sheet December 31, 2019 Non-current Liabilities Deferred Tax Liability Draft the income tax expense section of the income statement for each year, beginning with "Income before income taxes." (Enter loss using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Tamarisk Corp. Income Statement (Partial) For the Year Ended December 31, 2017 Income before Income Taxes ome Taxes 145600 Income Tax Expense Current 4 0320) Deferred 17920 58240 T Net Income / (Loss) 87360 Tamarisk Corp. Income Statement (Partial) For the Year Ended December 31, 2018 ] Income before Income Taxes 78400 Income Tax Expense Current 27440 Deferred 7840 I Adjustment 2240 37520 Net Income / (Loss) 115920 Tamarisk Corp. Income Statement (Partial) For the Year Ended December 31, 2019 Income before Income Taxes 78400 Income Tax Expense Current 27440 Deferred 7840 35280 Net Income / (Loss) 113680 Kieso, Intermediate Accounting, 16e Help System Announcements CALCULATOR PRINTER VERSION BACK NEXT Problem 19-7 Tamarisk Corp. sold an investment on an installment basis. The total gain of $67,200 was reported for financial reporting purposes in the period of sale. The company qualifies to use the installment-sales method for tax purposes. The installment period is 3 years; one-third of the sale price is collected in the period of sale. The tax rate was 40% in 2017, and 35% in 2018 and 2019. The 35% tax rate was not enacted in law until 2018. The accounting and tax data for the 3 years is shown below. Financial Accounting Tax Return 2017 (40% tax rate) Income before temporary difference Temporary difference $78,400 67,200 $145,600 $78,400 22,400 $100,800 Income 2018 (35% tax rate) Income before temporary difference Temporary difference $78,400 $78,400 22,400 $100,800 Income $78,400 2019 (35% tax rate) Income before temporary difference Temporary difference $78,400 $78,400 22,400 Income $78,400 $100,800 Your answer is correct. Calculate cumulative temporary differences for years 2017-2019. 2017 2018 2019 Cumulative temporary difference nce ( 44800 22400) U Calculate current tax expense for years 2017-2019. for 2017 su 40320 Current tax expense Texpense, Current tax expense for 2018 T 35280 Current tax J for 2019 $ 35280 Calculate deferred tax expense for 2017-2019. expense 17920 Deferred tax for 2017 Deferred tax one -7840 for 2018 benefit Deferred tax for 2019 $ 7840 SHOW LIST OF ACCOUNTS SHOW SOLUTION SHOW ANSWER Your answer is correct. Prepare the journal entries to record the income tax expense, deferred income taxes, and the income taxes payable at the end of each year. No deferred income taxes existed at the beginning of 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) Date Account Titles and Explanation Debit Credit 2017 Income Tax Expense | Income Tax Payable JU58240 JUU JUL JU 2240 40320 17920 Deferred Tax Liability 2018 Deferred Tax Liability | Income Tax Expense (To record the adjustment for the decrease in the enacted tax rate.) Income Tax Expense Deferred Tax Liability | Income Tax Payable Jl 35280 (To record income taxes.) 2019 Income Tax Expense Deferred Tax Liability | 35280] JE Income Tax Payable SHOW LIST OF ACCOUNTS SHOW ANSWER LINK TO TEXT LINK TO TEXT LINK TO TEXT Kieso, Intermediate Accounting, 16e Help System Announcements CALCULATOR PRINTER VERSION BACK NEXT Your answer is correct. Show how the deferred taxes will appear on the balance sheet at the end of each year. Tamarisk Corp. Balance Sheet December 31, 2017 Non-current Liabilities Deferred Tax Liability 17920 Tamarisk Corp. Balance Sheet December 31, 2018 Non-current Liabilities Deferred Tax Liability 780 Tamarisk Corp. Balance Sheet December 31, 2019 Non-current Liabilities Deferred Tax Liability Draft the income tax expense section of the income statement for each year, beginning with "Income before income taxes." (Enter loss using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Tamarisk Corp. Income Statement (Partial) For the Year Ended December 31, 2017 Income before Income Taxes ome Taxes 145600 Income Tax Expense Current 4 0320) Deferred 17920 58240 T Net Income / (Loss) 87360 Tamarisk Corp. Income Statement (Partial) For the Year Ended December 31, 2018 ] Income before Income Taxes 78400 Income Tax Expense Current 27440 Deferred 7840 I Adjustment 2240 37520 Net Income / (Loss) 115920 Tamarisk Corp. Income Statement (Partial) For the Year Ended December 31, 2019 Income before Income Taxes 78400 Income Tax Expense Current 27440 Deferred 7840 35280 Net Income / (Loss) 113680