You have been asked by the management of Sally Ltd to assist with the preparation of the income tax entries for the year ended 30 June 2017. The company reported a profit before tax for the year to 30 June 2017 of $900 000. The companys statements of financial position include assets and liabilities as follows:

	2017	2016
Accounts receivable	$ 245 000	$ 200 000
Allowance for doubtful debts	(20 000)	(10 000)
Plant at cost	600 000	600 000
Less Accumulated depreciation	(190 000)	(120 000)
Net Plant	410 000	480 000
Interest receivable	10 000	20 000
Provision for long-service leave	48 000	62 000
Deferred tax asset	?	8 000
Deferred tax liability	?	10 000

Additional Information

1. Interest revenue of $10 000 is included in the profit for the year to 30 June 2017.
2. Expenses included in accounting profit for the year to 30 June 2017 are as follows:
   • parking and other fines $10 000 (not tax deductible)
   • depreciation expense for plant $70 000
   • doubtful debts expense $25 000
   • long-service leave expense $36 000.

c. Accumulated depreciation on plant for tax purposes is $280 000 on 30 June 2017 and $180 000 on 30 June 2016. There have been no acquisitions or disposals of plant during the current year

d. The corporate tax rate is 30%.

Required

1. Calculate taxable income for the year for Sally Ltd. Show your workings (10 marks).
2. Prepare the workings and the journal entries for the current and deferred tax for Sally Ltd for 30 June 2017 (20 marks).
3. A proforma deferred tax worksheet is included for your reference.There is no need to duplicate the worksheet in your answer. Please show your workings for deferred tax. As a guide, you may wish to state for each item the accounting base, the tax base and the temporary difference denoted as an asset or liability. Marks are awarded for each item and for the deferred tax journal entries required