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Saginaw Inc. completed its first year of operations with a pretax loss of $555,000. The tax return showed a net operating loss of $692,000, which the company will carry forward. The $137,000 book-tax difference results from excess tax depreciation over book depreciation. Management has determined that it should record a valuation allowance equal to the net deferred tax asset. Assuming the current tax expense is zero, prepare the journal entries to record the deferred tax provision and the valuation allowance. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

a. Prepare the journal entry to record the deferred tax consequences for recognition of the current year NOL before considering the valuation allowance.

No	Transaction	General Journal	Debit	Credit
1	1	Deferred tax asset	235,280
		Deferred tax benefit		235,280

b. Prepare the journal entry to record the deferred tax consequences of the depreciation book-tax difference.

No	Transaction	General Journal	Debit	Credit
1	1	Deferred tax expense
		Deferred tax liability

c. Prepare the journal entry to record the deferred tax consequences of the valuation allowance.

No	Transaction	General Journal	Debit	Credit
1	1	Deferred tax benefit
		Valuation allowance

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