Accounting for income tax

Jackson Storm Ltd commenced business on 1 July 2017, with share capital of $300,000. On 30 June 2018, the company presents its first Statement of Profit or Loss and Other Comprehensive Income, and first Statement of Financial Position. The statements are prepared before considering taxation. The following information is available:

Statement of Profit or Loss and Other Comprehensive Income (Extract) for the year ended 30 June 2018

Revenue		2 150 000
Government grant (exempt from income tax)		50 000
Expenses
Cost of sales	925 000
Advertising	59 000
Annual leave	25 000
Depreciation equipment	70 000
Depreciation motor vehicles	30 000
Doubtful debts expense	34 000
Entertainment (not tax deductible)	4 500
Insurance	18 000
Rent	78 000
Salaries	335 000
Warranty expenses	18 500
Other expenses	47 200	1 644 200
Accounting profit before tax		555 800

Statement of Financial Position (Extract) as at 30 June 2018
	$	$
Assets
Cash		40 000
Inventory		162 900
Accounts receivable	250 000
Less: allowance for doubtful debts	(32 000)	218 000
Prepaid insurance		7 000
Equipment cost	700 000
Less: accumulated depreciation	(70 000)	630 000
Motor vehicles cost	120 000
Less: accumulated depreciation	(30 000)	90 000
Total assets		1 147 900
Liabilities
Accounts payable		54 600
Loan		200 000
Provision for annual leave		21 000
Provision for warranties		16 500
Total liabilities		292 100
Net assets		855 800
Equity
Share capital		300 000
Retained earnings		555 800
		855 800

Additional information:

The company purchased equipment at a cost of $700,000 on 1 July 2017. The equipment is depreciated over ten years for accounting purposes, and seven years for taxation purposes (using the straight-line basis of depreciation, and a residual value of nil).

The company purchased motor vehicles at a cost of $120,000 on 1 July 2017. The motor vehicles are depreciated over four years for accounting purposes, and six years for taxation purposes (using the straight-line basis of depreciation, and a residual value of nil).

Tax deductions for annual leave, warranties, insurance are available when the amounts are paid, and not as amounts are accrued.

Amounts received from sales, including those on credit terms, are taxed at the time the sale is made.

Tax deductions are not available for doubtful debts. Tax deductions are only available when bad debts are written off.

The tax rate is 30%.

Required:

i) Determine the balance of any current tax liability and deferred tax assets and deferred tax liabilities for Jackson Storm Ltd as at 30 June 2018, in accordance with AASB 112. Use appropriate worksheets and show all necessary workings.

ii) Prepare the journal entries to record the current tax liability and deferred tax assets and deferred tax liabilities.