Question: Shear, Inc. began operations in 2010. Included in Shears 2010 financial statements were bad debt expenses of $1,400 and profit from an installment sale of

Shear, Inc. began operations in 2010. Included in Shear’s 2010 financial statements were bad debt expenses of

$1,400 and profit from an installment sale of $2,600. For tax purposes, the bad debts will be deducted and the profit from the installment sale will be recognized in 2011. The enacted tax rates are 30% in 2010 and 25% in 2011. In its 2010 income statement, what amount should Shear report as deferred income tax expense?

a. $300

b. $360

c. $650

d. $780

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