The accounting profit before tax of Leela Ltd for the year ended 30 June 2011 was $187 000 and included the following items of income and expense:

$

Government grant10 000

Rent revenue2 000

Entertainment costs4 000

Bad debts expense6 200

Depreciation of plant25 000

Insurance expense8 000

Long service leave expense18 400

Warranty expense3 000

Amortisation of Development costs25 000

The draft statements of financial position at 30 June 2011 and 30 June 2010 included the following assets and liabilities:

20112010

$$

Accounts Receivable172 000165 000

Allowance for doubtful debts(6 500)(7 000)

Prepaid insurance4 9006 700

Plant250 000250 000

Accumulated depreciation - plant(100 000)(75 000)

Development costs100 000-

Accumulated amortisation - development costs(25 000)-

Deferred tax asset?11 300

Rent received in advance25 00020 000

Provision for Warranty 27 00038 000

Long service leave payable13 00014 500

Deferred tax liability?3 300

Additional information:

1.In the previous year Leela Ltd made a tax loss of $24 000 in respect of which the company had recognised a deferred tax asset.

2.For accounting purposes the plant is depreciated at 10% straight line. For tax purposes the plant is depreciated at 15% straight line.

3.All plant was purchased on 1 July 2007, and none has been sold.

4.Development costs of $100 000 were incurred on 1 July 2010, all of which is deductible for tax purposes in the current year.

5.The tax rate is 30%.

Required:

a)Calculate and record in a journal entry the balance of any current tax liability for Leela Ltd as at 30 June 2011.

b)Using an appropriate worksheet, calculate the balance day adjustments to deferred tax asset and deferred tax liability accounts as at 30 June 2011.

c)Prepare the necessary general journal entry to reflect adjustments calculated for deferred tax asset and deferred tax liability accounts.