TPW, a calendar year taxpayer, sold land with a $574,000 tax basis for $780,000 in February. The purchaser paid $78,000 cash at closing and gave TPW an interest-bearing note for the $702,000 remaining price. In August, TPW received a $56,200 payment from the purchaser consisting of a $35,100 principal payment and a $21,100 interest payment. In the first year after the year of sale, TPW received payments totaling $107,400 from the purchaser. The total consisted of $70,200 principal payments and $37,200 interest payments.

A. For the first year after the year of sale, compute the difference between TPWs book and tax income resulting from the installment sale method.

B.Is this difference favorable or unfavorable?

C.Using a 21 percent tax rate, determine the effect of the difference on the deferred tax asset or liability generated in the year of sale.

Using a 21 percent tax rate, determine the effect of the difference on the deferred tax asset or liability generated in the year of sale. (Round gross profit percentage to 2 decimal places. Round your intermediate calculations and final answer to the nearest whole dollar amount.)

Required A $176620 IS WRONG

Is this difference favorable or unfavorable?

Required B= unfavorable

Using a 21 percent tax rate, determine the effect of the difference on the deferred tax asset or liability generated in the year of sale. (Round gross profit percentage to 2 decimal places. Round your intermediate calculations and final answer to the nearest whole dollar amount.)

Required C

Reduction selected answer correct

in

deferred tax liability selected answer correct

is

$45,921 selected answer WRONG