Exhibit 18-1 on December 31, 2013, Fredericksburg, Inc

Exhibit 18-1 On December 31, 2013, Fredericksburg, Inc. had no temporary differences that created deferred income taxes. On January 2, 2014, a new machine was purchased for $30,000. Straight-line depreciation over a four-year life (no residual value) was used for financial accounting. Depreciation expense for tax purposes was $11,000 in 2014, $9,000 in 2015, $6,000 in 2016, and $4,000 in 2013. In each year, the income tax rate was 20% and Fredericksburg had no other items that created differences between pretax financial income and taxable income. Fredericksburg reported the following pretax financial income for 2014 through 2017:
- Refer to Exhibit 18-1. The entry to record income taxes on December 31, 2016, would include a

A) debit to Deferred Tax Asset for $300
B) credit to Income Taxes Payable for $7,700
C) debit to Income Tax Expense for $8,000
D) debit to Deferred Tax Liability for $300