Dixon development began operations in december 2018. when lots for industrial development are sold, dixon recognizes income for financial reporting purposes in the year of the sale. for some lots, dixon recognizes income for tax purposes when collected. income recognized for financial reporting purposes in 2018 for lots sold this way was $12 million, which will be collected over the next three years. scheduled collections for 2019–2021 are as follows: 2019 $ 4 million 2020 5 million 2021 3 million $ 12 million pretax accounting income for 2018 was $16 million. the enacted tax rate is 40%. required: 1. assuming no differences between accounting income and taxable income other than those described above, prepare the journal entry to record income taxes in 2018. 2. suppose a new tax law, revising the tax rate from 40% to 35%, beginning in 2020, is enacted in 2019, when pretax accounting income was $15 million. no 2019 lot sales qualified for the special tax treatment. prepare the appropriate journal entry to record income taxes in 2019. 3. if the new tax rate had not been enacted, what would have been the appropriate balance in the deferred tax liability account at the end of 2019?

Fanning company is considering the addition of a new product to its cosmetics line. the company has three distinctly different options: a skin cream, a bath oil, or a hair coloring gel. relevant information and budgeted annual income statements for each of the products follow. skin cream bath oil color gel budgeted sales in units (a) 110,000 190,000 70,000 expected sales price (b) $8 $4 $11 variable costs per unit (c) $2 $2 $7 income statements sales revenue (a × b) $880,000 $760,000 $770,000 variable costs (a × c) (220,000) (380,000) (490,000) contribution margin 660,000 380,000 280,000 fixed costs (432,000) (240,000) (76,000) net income $228,000 $140,000 $204,000 required: (a) determine the margin of safety as a percentage for each product. (b) prepare revised income statements for each product, assuming a 20 percent increase in the budgeted sales volume. (c) for each product, determine the percentage change in net income that results from the 20 percent increase in sales. (d) assuming that management is pessimistic and risk averse, which product should the company add to its cosmetics line? (e) assuming that management is optimistic and risk aggressive, which product should the company add to its cosmetics line?