Dominca's Ltds profit before tax for the year ended 31 December 2016 was $32,000. Included in this profit are the following items of income and expense:

Amoristion of development costs	$10,000
Carrying amount of equipment sold	18,000
Depreciation building (5%)	15,000
Depreciation equipment (20%)	20,000
Depreciation motor vehicle (25%)	4,500
Doubtful debts expense	3,000
Employee benefits expense	4,600
Entertainment expense	1,500
Fines and penalties	1,000
Goodwill impairment	3,000
Insurance expense	2,400
Interest revenue	600
Proceeds on sale of equipment	19,000
Rent revenue	16,000
Royalty revenue (exempt income)	5,000
Warranty expense	1,000

At 31 December, the companys draft statements of financial position showed the following balances:

	2016	2015
Assets
Cash	$12,500	$8,000
Accounts receivable	13,000	12,000
Allowance for doubtful debts	(3,400)	(2,500)
Inventories	17,000	21,500
Interest receivable	900	500
Prepaid Insurance	2,900	2,500
Rent receivable	2,800	2,400
Development costs	30,000	-
Accumulated amortisation	(10,000)	-
Motor vehicle	18,000	18,000
Accumulated depreciation	(15,750)	(11,250)
Equipment	100,000	130,000
Accumulated depreciation	(60,000)	(52,000)
Buildings	300,000	300,000
Accumulated depreciation	(150,000)	(135,000)
Goodwill	5,000	5,000
Goodwill - accumulated impairment losses	(4,000)	(1,000)
Deferred tax asset	?	5,450
Liabilities
Accounts payable	15,400	20,500
Current tax liability	?	-
Provision for employee benefits	5,500	7,000
Provision for warranties	2,900	2,000
Mortgage loan	110,000	140,000
Deferred tax liability	?	5,205

Additional information:

(a) A tax deduction for development expenditure of 125% of the $30,000 spent during the year is available under income tax legislation. The profit reflects the amount of development costs amortised in the current period.

(b) A tax deduction of $22,000 (22%) can be claimed on equipment, but the motor vehicle is fully depreciated for tax purposes. (c) The equipment sold on 1 January cost $30,000 when it was purchased 2 years before the date of sale. (d) Deductions are only available for employee benefits when amounts are paid and not as they are accrued.

(e) Actual amounts paid for insurance are allowed as a tax deduction.

(f) No deduction is allowed for taxation purposes in relation to entertainment, fines and penalties.

(g) Rent revenue and interest is taxable when amounts are received.

(h) Depreciation of buildings are not allowed as tax deduction.

(i) The deferred tax asset (DTA) balance at 31 December 2015 comprised: DTAs relating to temporary differences: $3,450. DTAs relating to carried forward tax losses: $2,000.

(j) No journal entries related to tax have been recorded for the year ended 31 December 2016. Assume the tax balances at 31 December 2015 are correct.

(k) The tax rate is 30%.

Required:

1. Calculate the taxable income and current tax liability using an appropriate worksheet for the year ended 31 December 2016 (show all workings).

2. Prepare the deferred tax worksheet to calculate the deferred tax asset and liability balances and adjustments for the year ended 31 December 2016. Include all accounts and net balances where appropriate.

3. Prepare the journal entries to recognise the current tax liability, deferred tax assets and liabilities at 31 December 2016 calculed in 1. and 2.