For calendar year 2007, Stalk Corp. reported depreciation of $1,000,000 in its income statement. On its 2007 income tax return, Stalk reported depreciation of $1,600,000. Stalk's income statement also included $225,000 accrued warranty expense that will be deducted for tax purposes when paid. Stalks enacted tax rates are 30% for 2007 and 2008, and 24% for 2009 and 2010. The depreciation difference and warranty expense will reverse over the next three years as follows:
Depreciation Difference Warranty Expense
2008 $250,000 $ 55,000
2009 190,000 55,000
2010 160,000 115,000
$600,000 $225,000
These were Stalk's only temporary differences. In Stalk's 2007 income statement, the deferred portion of its provision for income taxes should be
a. $200,700.
b. $101,700
c. $109,800