2. Sunshine Ltd commences operations on 1 July 2022. One year after the commencement of its operations (30 June 2023) the entity prepares the following information, showing both the carrying amounts for accounting purposes and the tax bases of the respective assets and liabilities.

	Carrying amounts ($)	Tax bases ($)
Assets
Cash	60 000	60 000
Accounts receivablenet	50 000	60 000
Prepaid insurance	20 000
Inventory	80 000	80 000
Plantnet	450 000	400 000
Land	600 000	400 000
	1 260 000	1 000 000
Liabilities
Accounts payable	60 000	60 000
Provision for long-service leave	30 000
Provision for warranty	40 000
Loan payable	400 000	400 000
	530 000	460 000
Net assets	730 000	540 000

Other information

After adjusting for differences between tax rules and accounting rules, it is determined that the taxable profit of Sunshine Ltd is $700 000.

There is an allowance for doubtful debts of $10 000.

An item of plant is purchased at a cost of $600 000 on 1 July 2022. For accounting purposes it is expected to have a life of four years; however, for taxation purposes it can be depreciated over three years. It is not expected to have any residual value.

sunshine Ltd has some land, which cost $400 000 and which has been revalued to its fair value of $600 000 in accordance with AASB 116.

None of the amounts accrued in respect of warranty expenses or long-service leave has actually been paid.

The tax rate is 30 per cent.

Required:

1. Calculate the amount of temporary differences, if any, at year end, and state whether it is deductible or taxable.

2. Prepare the year-end journal entries to account for tax using the balance sheet method.