Silver Appliance Company operated a large retail appliance store in San Diego. The store sold all sorts of household appliances, plus auto and home sound equipment. The company's owner, Brian Silver (known by his customers as "Big Brian" because of his rather ample proportions), had for many years been an extremely productive salesman in a San Diego store of the Highland Appliance chain. Having built up a large personal clientele during those years, Mr. Silver felt he could easily shift customers to a new store, were he to open one. In 2003, he did just that, and the store had rapidly achieved an annual sales volume of over $5 million.

Questions
1. If Silver Appliance Company had used the installment method for tax purposes in the years 2006-2010, how different would its tax payments have been in each of those years? What would the year-end balance in deferred taxes have been in each of those years? (Round calculations to the nearest $10.)
2. How would you respond to Mr. Silver's questions concerning (a) interpretation of the amount of deferred taxes, (b) tax payments in a period of declining sales, and (c) double taxation of installment sales made in 2010?

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EXHIBIT 1 Installment Sales Data (thousands of dollars) 2006 2007 2008 2009 2010 Installment receivables as of December 31 $190.1 5351.9 $526.2 $559.4 $489.1 Pretax profit as reported Gross margin percentage 332.6 415.3 478.2 492.5 461.3 34.6% 35.196 34 .296 33.4% 32.2%