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2. Simpson Inc. had a balance in the Deferred Tax Liability account of $420 on December...

2. Simpson Inc. had a balance in the Deferred Tax Liability account of $420 on December 31, 2015, resulting from depreciation temporary differences. Differences in tax and accounting depreciation for assets purchased on January 1, 2015 is as follows: YEAR FINANCIAL DEPRECIATION TAX DEPRECIATION 2015 $2,000 $3,400 2016 $2,000 2,600 2017 $2,000 1,200 2018 $2,000 800 $8,000 $8,000 In addition to the 2016 depreciation temporary difference, Simpson expensed $1,000 of warranty costs that will be deducted for tax purposes when paid in future years. Simpson’s taxable income in 2016 was $20,000. The 2016 income tax rate was 30% and no change in tax rate for future years have been enacted.

REQUIRED: Prepare the income tax journal entry for Simpson Inc. for December 31, 2016.

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