Recording Multiple Temporary Differences

Additional information

On December $31$ of Year $1,$ GAAP basis of installment sale receivables, $$82,500$; tax basis, $$0.$ Receivables will be collected equally over Year $2,$ Year $3,$ and Year $4.$

On December $31$ of Year $1,$ GAAP basis of litigation accrual, $$67,500$; tax basis, $$0.$ Management expects the litigation loss to be recorded in the tax return in Year $4$

Required

Deferred Taxes and Journal Entry

c$.$ Record the income tax journal entry on December $31$ of Year $1$ for each of the following separate situations.

Note: If a line in a journal entry isn't required for the transaction, select $"$N$/$A$"$ as the account names and leave the Dr$.$ and Cr$.$ answers blank $($zero$).$

Taxable income is $$412,500$ for Year $1.$

Deferred tax liability had a January $1$ of Year $1$ balance of $$12,500$ instead of $$0.$

Deferred tax asset had a January $1$ of Year $1$ balance of $$7,000$ instead of $$0.$

Litigation loss was estimated at $$42,500$ instead of $$67,500.$

GAAP basis of installment sales receivables was $$110,000$ instead of $$82,500.$