The records of Lane Corporation show the following pretax GAAP income for the past $4$ years.

The income tax rate is $25\%.$ The company had the following differences between GAAP basis and tax basis income.

For GAAP purposes, installment sales receivable is $$30,000$ on December $31$ of Year $1.$ On the tax return, $$10,000$ will be recognized each year, Year $2$ through Year $4,$ as cash is collected.

For GAAP purposes, warranty expenses of $$4,000$ are accrued in Year $1.$ On the tax return, $$1,000$ will be deducted each year, Year $1$ through Year $4,$ as expenditures are made related to warranties.

The company also recorded interest revenue of $$1,250$ each year on municipal bonds, which is not taxable.

Required

Financial Statement Presentation

a$.$ Prepare schedules to compute the deferred tax balances on December $31$ of Year $1,$ Year $2,$ Year $3,$ and Year $4.$

$-$Note: Do not use negative signs with your answers.

b$.$ Compute the increase to income tax payable on December $31$ of Year $1,$ Year $2,$ Year $3,$ and Year $4.$

$-$Note: Round each amount to the nearest whole dollar. Use the rounded amounts for later calculations.