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  3. tpw, a calendar year taxpayer, sold land with a $6

TPW, a calendar year taxpayer, sold land with a $613,000 tax basis for $785,000 in...

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Accounting

TPW, a calendar year taxpayer, sold land with a $613,000 tax basis for $785,000 in February. The purchaser paid $78,500 cash at
closing and gave TPW an interest-bearing note for the $706,500 remaining price. In August, TPW received a $56,525 payment
from the purchaser consisting of a $35,325 principal payment and a $21,200 interest payment. In the first year after the year of
sale, TPW received payments totaling $108,050 from the purchaser. The total consisted of $70,650 principal payments and
$37,400 interest payments.
Required:
a. For the first year after the year of sale, compute the difference between TPW's book and tax income resulting from the
installment sale method.
b. Is this difference favorable or unfavorable?
c. Using a 21 percent tax rate, determine the effect of the difference on the deferred tax asset or liability generated in the year of
sale.
Complete this question by entering your answers in the tabs below.
Required A
For the first year after the year of sale, compute the difference between TPW's book and tax income resulting from the
installment sale method.
Note: Round gross profit percentage to 2 decimal places and final answer to the nearest whole dollar amount.
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