At the end of 2015, Dolf Company prepared the following schedule of its deferred tax items (based on the currently enacted tax rate of 30%):

Deferred Tax Item #	Account Balance	Related Asset or Liability causing the deferred tax item
1	$ 8,400 debit	Current asset
2	10,200 debit	Noncurrent asset
3	5,700 credit	Current liability
4	17,700 credit	Noncurrent liability

On April 30, 2016, Congress changed the income tax rate to 40% for 2016 and future years. At the end of 2016, Dolf reported taxable income of $62,500 for 2016. At that time, Dolf determined that its deferred tax items should have balances as follows at the end of 2016 (based on the 40% tax rate): #1, $10,700 debit; #2, $15,000 debit; #3, $7,000 credit; #4, $25,900 credit.

Required:

1.	Show how the deferred tax items are reported on Dolfs December 31, 2015, balance sheet.
2.	Prepare the April 30, 2016, journal entry to correct Dolfs deferred tax items.
3.	Prepare Dolfs income tax journal entry at the end of 2016.
4.	Show how the current and deferred tax items are reported on Dolfs December 31, 2016, balance sheet.
5.	Calculate the total income tax expense for 2016.

CHART OF ACCOUNTS

Dolf Company

General Ledger

	ASSETS
111	Cash
121	Accounts Receivable
141	Inventory
152	Prepaid Insurance
161	Deferred Tax Asset (#1)
162	Deferred Tax Asset (#2)
163	Deferred Tax Asset (#3)
164	Deferred Tax Asset (#4)
181	Equipment
198	Accumulated Depreciation

	LIABILITIES
211	Accounts Payable
231	Salaries Payable
250	Unearned Revenue
261	Income Taxes Payable
262	Deferred Tax Liability
263	Deferred Tax Liability (#1)
264	Deferred Tax Liability (#2)
265	Deferred Tax Liability (#3)
266	Deferred Tax Liability (#4)

	EQUITY
311	Common Stock
331	Retained Earnings

	REVENUE
411	Sales Revenue

	EXPENSES
500	Cost of Goods Sold
511	Insurance Expense
512	Utilities Expense
521	Salaries Expense
532	Bad Debt Expense
540	Interest Expense
541	Depreciation Expense
559	Miscellaneous Expenses
910	Income Tax Expense

2. Prepare the April 30, 2016, journal entry to correct Dolfs deferred tax items. Additional Instruction

PAGE 1

GENERAL JOURNAL

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1
2
3
4
5

3. Prepare Dolfs income tax journal entry on December 31, 2016. Additional Instruction

PAGE 1

GENERAL JOURNAL

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1
2
3
4
5
6

Labels
Current Liabilities
Noncurrent Liabilities

1. Show how the deferred tax items are reported on Dolfs December 31, 2015, balance sheet. Additional Instructions

Dolf Company

Partial Balance Sheet

December 31, 2015

1
2

4. Show how the current and deferred tax items are reported on Dolfs December 31, 2016, balance sheet. Additional Instructions

Dolf Company

Partial Balance Sheet

December 31, 2016

1
2
3
4

5. Calculate the total income tax expense for 2016.

$ ________