P$5.$ Temporary Differences, Deferred Tax Liabilities, Change in Tax Rates. Kimm$-$Mills Incorporated $($KMI$)$ acquired a piece of equipment at a total cost of $$5,400,000.$ KMI uses the straight$-$line method of depreciation for financial reporting purposes and an accelerated method for tax purposes is subject to a $40\%$ tax rate. We book purposes and for tax purposes. There is no estimated scrap value. KM present the income and depreciation summary for both tax and GAAP.

$\backslash$table$[[,$Income before Tax and Depreciation,Tax Depreciation,GAAP Depreciation$],[$Year$,,$$$1,080,000,$$ $900,000],[1,$$$1,200,000,1,728,000,900,000],[2,1,880,000,1,036,800,900,000],[3,1,980,000,622,080,900,000],[4,2,100,000,,900,000],[5,1,750,000,622,080,],[6,1,200,500,311,040,900,000],[$Totals$,,$$$5,400,000,$$$5,400,000]]$

Required a

a Determine the balance of the deferred tax account at the end of each year.

b$.$ Prepare the journal entries to record the tax provision for each year.

c$.$ Prepare the journal entry to record the effect of a $35\%$ income tax rate that is enacted into law effective as of the beginning of Year $4.$

PNG ims