Hi, I don't know how to start with question 1.

1. Prepare, with supporting computations, all relevant tax entries for the year ended December 31, 2016.

Corporate Income Taxes - Assignment Lost Lagoon Ltd. (LLL), a publically listed, December 31 year-end company, did not have a good year. Poor attendance and several unsuccessful film releases resulted in a pre-tax operating loss. Following data relates to the company's December 31, 2016, year-end. Income Statement For the year ended December 31, 2016 Sales and Production revenues..................................................$4,570,000 Production costs.............................................................................. 4,109,000 461,000 Salaries and compensation.......................................................... 520,000 Depreciation, capital assets........................................................ 427,000 General operating expenses....................................................... 325,000 Meals and entertainment expenses.......................................... 110,000 Warranty expenses, equipment sales..................................... 26,000 Interest expense......................................................................... 12,000 Interest and penalties, CRA levied.......................................... 11,000 Other: Loss on equity held investment................................................. 4,000 Dividends from taxable Canadian companies........................ 12,000 Rental income on redundant property sublease................. 30,000 Operating loss before taxes..................................................... $932,000 The following additional information is available. Net book value and Undepreciated Capital Cost of assets at December 31, 2015 was $4,250,000 and $3,890,000 respectively. There were no asset additions or disposals in 2016. DEL claimed no CCA in 2016. Warranties paid in 2016 amounted to $20,000. The balance in the estimated warranty liability account at December 31, 2015 was $256,000 with an associated deferred tax balance of $76,800. DEL received dividends from its equity held investment, a Canadian corporation, of $6,000 in 2016. Rental income in 2016 is recognized from subletting extra production space on January 1, 2015. This was a three year sublet and the entire rental was collected and taxed at that time in the amount of $90,000. Taxable incomes and associated tax rates for previous years are as follows: 2012: $235,000 (28%), 2013: $116,000 (28%), 2014: $125,000(26%); 2015: $130,000 (?%) The statutory tax rate for 2016 is 32%. On January 12, 2017, during the audit of LLL, the government enacted a statutory tax rate of 34% for the foreseeable future. LLL has determined that, if applicable, it is more likely than not that there will be sufficient future taxable incomes to apply any loss carryforwards. Required: 1. Prepare, with supporting computations, all relevant tax entries for the year ended December 31, 2016. 2. Prepare, in good form, the excerpted income statement beginning with \"Operating loss before taxes...\" Page 1 of 3 - 2017S1 - Student Corporate Income Taxes - Assignment Reconciliation of accounting to tax loss: Deferred tax analysis: Hint: The tax rate for 2015 is not provided...you can derive and from this you can derive all of the deferred tax balances at the beginning of 2016... Item Tax GAAP Dif DTA/DTL Beg Bal Change All tax entries here... Page 2 of 3 - 2017S1 - Student Corporate Income Taxes - Assignment Lost Lagoon Limited Partial income statement For the year ended December 31, 2016 Operating loss before taxes...............................................$932,000 Page 3 of 3 - 2017S1 - Student