Abyssal Inc. is a domestic corporation with the following balance sheet for book and tax purposes at the end of the year. Assume a 21% corporate tax rate and no valuation allowance. Assets Tax Debit/(Credit) Book Debit/(Credit) Cash $15,000 $15,000 Accounts receivable 7,000 7,000 Buildings 420,000 420,000 Accumulated depreciation (300,000) (60,000) Furniture & fixtures 50,000 50,000 Accumulated depreciation (50,000) (10,000) Total assets $142,000 $422,000

Liabilities Accrued warranty expense $0 ($15,000) Note payable (120,000) (120,000) Total liabilities ($120,000) ($135,000) Stockholders Equity Paid in capital ($10,000) ($10,000) Retained earnings (12,000) (277,000) Total liabilities and stockholders equity ($22,000) ($287,000) Abyssals gross deferred tax assets and liabilities at the beginning of the year are as follows: Accrued warranty expense $20,000 Subtotal $20,000 Applicable tax rate 21% Gross deferred tax asset $ 4,200 Building Accumulated depreciation ($300,000) Furniture & fixtures Accumulated depreciation (30,000) Subtotal ($330,000) Applicable tax rate 21% Gross deferred tax liability ($69,300) Abyssals book income before tax is $12,000. Abyssal earned $1,000 in tax-exempt municipal bond interest and incurred $700 in nondeductible business meal expense for the current year. Questions (1) Determine the net deferred tax asset or net deferred tax liability at year-end. (2) Determine the change in deferred tax assets for the current year. (3) Determine the change in deferred tax liabilities for the current year. (4) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for the year.