Saginaw Inc. completed its first year of operations with a pretax loss of $$647,500.$ The tax return showed a net

operating loss of $$807,500,$ which the company will carry forward. The $$160,000$ book$-$tax difference results from

excess tax depreclation over book depreclation. Management has determined that it should record a valuation

allowance equal to the net deferred tax asset. Assuming the current tax expense is zero, prepare the journal entrles

to record the deferred tax provision and the valuation allowance. $($If no entry is requlred for a transaction$/$event$,$

select $"$No Journal Entry Required" In the first account fleld.$)$

Required:

a$.$ Prepare the journal entry to record the deferred tax consequences for recognition of the current year NOL

before considering the valuation allowance.

b$.$ Prepare the journal entry to record the deferred tax consequences of the depreclation book$-$tax difference.

c$.$ Prepare the journal entry to record the deferred tax consequences of the valuation allowance.

Journal entry worksheet

Record the deferred tax consequences for recognition of the current year NOL

before considering the valuation allowance.

Note: Enter debits before credits.