P$18\mathrm{.}7$B $($LO $1,2,4)$ Groupwork $($One Temporary Difference, Tracked $3$ Years, Change in Rates, Income Statement Presentation$)$ Treanor Corp. sold excess land on an installment basis. The total gain of $\backslash (\backslash$$ $210,000\backslash )$ 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; one$-$third of the sale price is collected in the period of sale. The tax rate was $\backslash (40\backslash \%\backslash ),$ in $2025,$ and $\backslash (20\backslash \%\backslash )$ in $2026$ and $2027.$ The $\backslash (20\backslash \%\backslash )$ tax rate was not enacted in law until $2026.$ The accounting and tax data for the $3$ years is shown below.

Instructions

a$.$ 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 $2025.$

b$.$ Explain how the deferred taxes will appear on the balance sheet at the end of each year. $($Assume Installment Accounts Receivable is classified as a current asset.$)$

c$.$ Draft the income tax expense section of the income statement for each year, beginning with "Income before income taxes."