Problem 3-35 (LO. 1, 4)

Kantner, Inc., is a domestic corporation with the following balance sheet for book and tax purposes at the end of the year. Assume a 21% Federal corporate tax rate and no valuation allowance.

		Tax Debit/(Credit)			Book Debit/(Credit)
Assets
Cash		$1,000			$1,000
Accounts receivable		9,000			9,000
Buildings		850,000			850,000
	Accumulated depreciation	(700,000)			(620,000)
Furniture and fixtures		40,000			40,000
	Accumulated depreciation	(10,000)			(8,000)
Total assets		$190,000			$272,000
Liabilities
Accrued warranty expense		$0			($40,000)
Note payable		(16,000)			(16,000)
Total liabilities		($16,000)			($56,000)
Stockholders' Equity
Paid-in capital		($50,000)			($50,000)
Retained earnings		(124,000)			(166,000)
Total liabilities and stockholders' equity		($190,000)			($272,000)

The partial beginning of the year tax and book balance sheet information is provided below. Complete the table and determine Kantners deferred tax benefit or expense for the current year.

	Net Book Value			Tax Adjusted Basis			Temporary Difference			Combined Tax Rate			Deferred Tax Asset/(Liability)
Accumulated depreciationBuilding	$600,000			$662,000			$fill in the blank 1			21%			$ 13020
Accumulated depreciationFurniture & fixtures	4,000			4,400			fill in the blank 3			21%			$ 84
Accrued warranty expense	30,000			0			fill in the blank 5			21%			$ 6300
Net deferred tax liability													$ ?

Provide the journal entry necessary to record this amount.

JOURNAL
DATE	Description	Post. Ref.	Debit	Credit
	Income tax expense (provision)		?
	Deferred tax liability			?