Temporary Preferences

At the end of 2013, its first year of operations, Slater Company reported a book value for its dependable assets of $40,000 for financial reporting purposes and $33,000 for income tax purposes. Slater earned taxable income of $97,000 during 2013. The company is subject to a 30% income tax rate, and no change has been enacted for future years. The depreciation was the only temporary difference between taxable income and pretax financial income.

1. Prepare Slater's income tax journal entry at the end of 2013. If an amount box does not require an entry, leave it blank.

Dec 31 Income Tax Expense

Income Tax Payable

Deferred Tax Liability

2. Show how the deferred taxes would be reported on Slater's December 31, 2013, balance sheet.

Slatter Company

Partial Balance Sheet

December 31, 2013

Noncurrent Liabilities

Deferred Tax Liability