On January 1, Year 1, the Dole Company Purchased an Asset

On January 1, Year 1, the Dole Company purchased an asset that cost $154,000. The asset had an expected useful life of seven years and no estimated residual value. The company initially decided to use sum-of-the-years'-digits SYD) depreciation for both financial accounting and income tax purposes. Depreciation expense for the straight-line
method and the sum-of-the-years'-digits method is as follows: $$\begin{array} { c c c r } \text { Year } & \begin{array} { c } \text { Straight-line } \\\text { over7Years }\end{array} & \begin{array} { r } \text { SYD over } \\\text { oYears }\end{array} & { \text { Difference } } \\\hline1 & \$ 22,000 & \$ 38,500 & \$ 16,500 \\2 & 22,000 & 33,000 & 11,000 \\3 & 22,000 & 27,500 & 5,500 \\4 & 22,000 & 22,000 & 0 \\5 & 22,000 & 16,500 & ( 5,500 ) \\6 & 22,000 & 11,000 & ( 11,000 ) \\7 & \underline { 22,000 } & \underline { 5,500 } & \underline { ( 16,500 } ) \\& \underline { \$ 154,000 } & \underline { \$ 154,000 } & \underline { \$ \quad 0 }\end{array}$$ At the beginning of Year 4, Dole changed from the sum-of-the-years'-digits method to the straight-line method of depreciation for financial reporting purposes. The company's income tax rate is 30%. In Year 3 and Year 4, Dole had
$90,000 pretax income before depreciation and income taxes.
Required:
a. Complete the following section of the income statement:

b. Prepare the journal entries to record the depreciation expense, tax expense, and the effect of the accounting change if any) in Year 4.