A reduction in the statutory tax rate would most likely benefit the company’s:

A. income statement and balance sheet.

B. income statement but not the balance sheet.

C. balance sheet but not the income statement.

The tax effects of temporary differences that give rise to deferred tax assets and liabilities are as follows ($ thousands):

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Deferred tax assets: Accrued expenses Tax credit and net operating loss carryforwards LIFO and inventory reserves Other Deferred tax assets Valuation allowance Net deferred tax assets Deferred tax liabilities: Depreciation and amortization Compensation and retirement plans Other Deferred tax liabilities Net deferred tax liability 2007 $8,613 2,288 5,286 2,664 18,851 (1,245) $17,606 $(27,338) (3,831) (1,470) (32,639) $(15,033) 2006 $7,927 2,554 4,327 2,109 16,917 (1,360) $15,557 $(29,313) (8,963) (764) (39,040) $(23,483)