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Relix, Inc., is a domestic corporation with the following balance sheet for book and tax purposes at the end of the year before recording any
Relix, Inc., is a domestic corporation with the following balance sheet for book and tax purposes at the end of the year before recording any net deferred tax asset or net deferred tax liability. Tax Debit/Credit) Book Debit/Credit) Assets Cash $500 $500 Accounts receivable 8,000 8,000 Buildings 750,000 Accumulated depreciation (450,000) 750,000 (380,000) 70,000 Furniture and fixtures 70,000 Accumulated depreciation (46,000) (38,000) Total assets $332,500 $410,500 Liabilities Accrued litigation expense $0 ($50,000) Note payable (78,000) (78,000) ($128,000) Total liabilities ($78,000) Stockholders' Equity Paid-in capital ($10,000) ($10,000) (272,500) Retained earnings (244,500) Total liabilities and stockholders' equity ($332,500) ($410,500) The partial beginning of the year tax and book balance sheet information is provided below. Complete the table and determine the Relix's deferred tax benefit or expense for the year. Assume a 21% Federal corporate tax rate and no valuation allowance. Tax Net Book Combined Deferred Tax Temporary Difference Adjusted Basis Value Tax Rate Asset/(Liability) Accumulated depreciation-Building $360,000 $417,000 57,000 21% 11,970 Accumulated depreciation Furniture & fixtures 31,000 35,200 4,200 21% 882 Accrued litigation expense 34,000 0 34,000 21% 7,140 Net deferred tax liability 5,712 Provide the journal entry necessary to record this amount. JOURNAL DATE Description Post. Ref. Debit Credit Income tax expense (provision) Deferred tax liability
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