Castle Corporation at the end of 2016.

Exercise 19-20 in Intermediate accounting.

A/R book basis $50,000, tax basis 0

Litigation liability book basis $30,000, tax basis 0

The litigation liability it is estimated will be settled in 2017. The differences in A/R will result in taxable amounts of $30,000 in 2017 and $20,000 in 2018. The company has taxable income of $350,000 in 2016 and it is expected will have taxable income in each of the following two years. Its enacted tax rate is 34% for all years. This is the company's first year of operations. The operating cycle of the business is 2 years.

a) Prepare the journal entry to record income tax expense, deferred income taxes and income taxes payable for 2016.

b) Indicate how deferred income taxes will be reported on the balance sheet at the end of 2016.