Case Development began operations in December 2016. When property is sold on an installment basis, Case recognizes installment income for financial reporting purposes in the year of the sale. For tax purposes, installment income is reported by the installment method. 2016 installment income was $770,000 and will be collected over the next three years. Scheduled collections and enacted tax rates for 2017-2019 are as follows:
2017 $ 184,000 30 %
2018 335,000 40
2019 251,000 40
Case also had product warranty costs of $97,000 expensed for financial reporting purposes in 2016. For tax purposes, only the $28,500 of warranty costs actually paid in 2016 was deducted. The remaining $68,500 will be deducted for tax purposes when paid over the next three years as follows:
2017 $ 23,400 30 %
2018 28,400 40
2019 16,700 40
Pretax accounting income for 2016 was $1,065,000, which includes interest revenue of $27,000 from municipal bonds. The enacted tax rate for 2016 is 30%.
Required:
1. Assuming no differences between accounting income and taxable income other than those described above, prepare the appropriate journal entry to record Case's 2016 income taxes. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in thousands and round your answers to 2 decimal places.)
2. What is Case's 2016 net income? (Enter your answer in thousands and round your answer to 2 decimal places.)
3. How should the deferred tax amounts be classified in a classified balance sheet? (Enter your answers in thousands and round your answers to 2 decimal places.)