On 1 January 2003, SPJ had an opening balance of $5000 on its tax account, which represented the balance on the account after settling its tax liability for the previous year. This balance arose from an overestimate of the tax due charged to the previous year's income statement. SPJ has a credit balance on its deferred tax account of $1.6 million at the same date.
SPJ has been advised that it should expect to pay $1 million tax on its trading profits for the year ended 31 December 2003 and increase its deferred tax account balance by $150 000.
Required:
Prepare extracts from the income statement for the year ended 31 December 2003, balance sheet at that date, and notes to the accounts showing the tax entries required.