The following information was extracted from the books of Muindi Mbingu Ltd for the year ended 31^st December 2018.

Additional information:

1. There was no deferred tax liability or asset in the prior years.
2. No operating loss or tax credit brought forward from the previous period.
3. The corporation tax rate was constant at 30%.

Required:

1. Compute the current tax expenses for 2017 and 2018. (6 marks)
2. Compute the deferred tax liability, asset and expense as at 2017 and 2018. (6 marks)
3. Prepare the journal entries to record the above transactions. (3 marks)

Profit before tax Taxable temporary difference Deductable temporary deference 2017 Shs. 2018 Shs. 300,000 500,000 30,000 80,000 10,000 40,000