Kraft Company made the following journal entry in late 2014 for rent on property it leases to Danford Corporation.

Cash                                                       120,000

            Unearned Rent Revenue           90,000

The payment represents rent for the years 2015 and 2016, the period covered by the lease. Kraft Company is a cash basis taxpayer. Kraft has income tax payable of $184,000 at the end of 2014, and its tax rate is 35%.

1. What amount of income tax expense should Kraft Company report at the end of 2014?

a.   $106,000

b.   $142,000

c.   $163,000

d.   $226,000

2. Assuming the income taxes payable at the end of 2015 is $204,000, what amount of income tax expense would Kraft Company record for 2015?

a.   $162,000

b.   $183,000

c.   $225,000

d.   $246,000