The long-term liabilities section of CPS Transportation's December 31, 2017, balance sheet included the following: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) a. A lease liability with 13 remaining lease payments of $24,000 each, due annually on January1 Lease liability $179,686 7,828 $171,858 Less: current portion The incremental borrowing rate at the inception of the lease was 10% and the lessor's implicit rate, which was known by CPS Transportation, was 9%. b. A deferred income tax liability due to a single temporary difference. The only difference between CPS Transportation's taxable income and pretax accounting income is depreciation on a machine acquired on January 1, 2017, for $660,000. The machine's estimated useful life is five years, with no salvage value. Depreciation is computed using the straight-line method for financial reporting purposes and the MACRS method for tax purposes. Depreciation expense for tax and financial reporting purposes for 2018 through 2021 is as follows: MACRS Straight-line DepreciationDepreciation Difference Year 2018 2019 2020 2021 $194,000 97,000 87,000 77,000 $132,000 132,000 132,000 132,000 $62,000 (35,000) (45,000) (55,000) The enacted federal income tax rates are 35% for 2017 and 40% for 2018 through 2021, income before income taxes was $1,060,000. For the year ended December 3t. 2018, CPSs On July 1, 2018, CPS Transportation issued $760,000 of 8% bonds. The bonds mature in 10 years and interest is payable each January 1 and July 1. The bonds were issued at a price to yield the investors 9%. CPS records interest at the effective interest rate. Required: 1. Determine CPS Transportation's income tax expense and net income for the year ended December 31, 2018. 2. Determine CPS Transportation's interest expense for the year ended December 31, 2018. 3. Prepare the long-term liabilities section of CPS Transportation's December 31, 2018, balance sheet. Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1Required 2 Required 3 Determine CPS Transportation's income tax expense and net income for the year ended December 31, 2018 CPS TRANSPORTATION Income Tax Expense and Net Income For the Year Ended December 31, 2018 Income before income taxes ncome tax expense: 1,060,000 $ 399,200 Current Deferred Net income 24,800424,000 $636,000 Required1 Required 2> Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1Required 2 Required3 Determine CPS Transportation's interest expense for the year ended December 31, 2018. (Do not round intermediate calculations. Round final answers to the nearest whole dollars.) CPS TRANSPORTATION Calculation of Interest Expense For the Year Ended December 31,2018 Capital lease obligation 5,467 interest Bond interest payable Total interest expense 15,467 Required 1 Required 3> Answer is not complete. Complete this question by entering your answers in the tabs below. Required Required 2 Required 3 Prepare the long-term liabilities section of CPS Transportation's December 31, 2018, balance sheet. (Do not round intermediate calculations. Round final answers to the nearest whole dollars.) CPS TRANSPORTATION Long-Term Liabilities Section of Balance Sheet December 31, 2018 Long-term liabilities Lease liability $ 171,858 $171,858 Less: current portion Bonds payable, net Deferred income tax liability Total long-term liabilities $171,858 Required 2 Required 3