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Wildhorse Corp. sold an investment on an installment basis. The total gain of $73,200 was reported for financial reporting purposes in the period of sale.
Wildhorse Corp. sold an investment on an installment basis. The total gain of $73,200 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; onethird of the sale price is collected in the period of sale. The tax rate was 40% in 2025 , and 20% in 2026 and 2027. The 20\% tax rate was not enacted in law until 2026. The accounting and tax data for the 3 years is shown below. 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 2025. (List all debit entries before credit entries. Credit account titles are outomatically indented when amount is entered. Do not indent manually, If no entry is required, select "No Entry' for the account titles and enter ofor the amounts.) Date Account Titles and Explanation Debit Credit 2025 2026 (To record the adjustment for the decrease in the enacted tax rate.) (To record income taxes.) 2027
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