Winter Gear, Inc. started business on January 1, 20X1. The company uses the income statement approach to estimating bad debts. The company incorrectly used the actual write-off of the receivable for the recorded bad debt expense in the below income statement.
Credit sales | $678,000 |
Bad debt expense as a percentage of sales | 2% |
Write-off of accounts receivable | $1,000 |
Tax rate | 30% |
Estimated tax payment | $31,000 |
Incorrect income statement, for the year ended December 31:
Sales | $678,000 |
Expenses | 549,200 |
Bad debt expense | 1,000 |
Pretax income | 127,800 |
Tax expense | 38,340 |
Net income | 89,460 |
What is the ending balance of deferred tax asset-allowance (DTA-allowance) for 20X1?
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