Milton Manufacturing Manufactures and Sells Ornamental Statues B) C) D)

Milton Manufacturing manufactures and sells ornamental statues.Because of good styling and marketing,sales have grown briskly.Milton has no pre-existing deferred tax liability.During 20X3,the following transactions occurred: 1.On January 1,20,000 new shares of common stock were sold at $100 per share.
2) Half of the proceeds from the stock sale were immediately invested in tax-free bonds yielding 8% per annum.The bonds were held throughout the year,resulting in interest revenue of $1,000,000 × .08 = $80,000.
3) Sales for the year were $9,000,000,with expenses of $4,300,000 reported under GAAP (not including income tax expense) .
4) Tax depreciation exceeded depreciation included in item 3 above by $500,000.
What journal entry would Milton make to record income tax expense and income tax payable at December 31?

A) $\begin{array}{lll}\text { Income Tax Expense } & 1,880,000 & \\\quad \text { Income Tax Payable } & & 1,680,000 \\\quad \text { Deferred Tax Liability } & & 200,000 \\\end{array}$

B) $\begin{array}{lccc}\text { Income Tax Expense } & 1,912,000 & \\\quad \text { Income Tax Payable } & & 1,880,000 \\\quad \text { Deferred Tax Liability } & &32,000 & \\\end{array}$

C) $\begin{array}{lccc}\text { Income Tax Expense } &1,800,000 \\\quad \text { Income Tax Payable } & & 1,714,000 \\\quad \text { Deferred Tax Liability } && 86,000 \\\end{array}$

D) $\begin{array}{lccc}\text { Income Tax Payable } & 1,714,000 & \\\text { Deferred Tax Liability } & 151,000 \\\quad \text { Income Tax Expense } & &1,865,000 \\\end{array}$

E) $\begin{array}{lccc}\text { Income Tax Payable } & 1,880,000\\\text { Deferred Tax Liability } & 32,000 \\\quad \text { Income Tax Expense } & &1,912,000 \\\end{array}$