At the end of 2016, Valerie Corporation reported a deferred tax liability of $41,000. At the end of 2017, the company had $241,000 of temporary differences related to property, plant, and equipment. Depreciation expense on this property, plant, and equipment has been lower than the CCA claimed on Valerie's income tax returns. The resulting future taxable amounts are as follows:

2018 ................................ $ 78,000

2019 .................................. 62,000

2020 .................................. 55,000

2021 .................................. 46,000

..................................... $241,000

The tax rates enacted as of the beginning of 2016 are as follows: 31% for 2016 and 2017; 30% for 2018 and 2019; and 25% for 2020 and later. Taxable income is expected in all future years.

Instructions

(a) Calculate the deferred tax account balance at December 31, 2017.

(b) Prepare the journal entry for Valerie to record deferred taxes for 2017.

(c) Early in 2018, after the 2017 financial statements were released, new tax rates were enacted as follows: 29% for 2018 and 27% for 2019 and later. Prepare the journal entry for Valerie to recognize the change in tax rates.