Answer:
See the journal entry below.
Explanation:
Before preparing the journal entry, the following are calculated first:
Income tax expense in 2019 = (Taxable income in 2019 * Tax rate in 2019) + (Taxable income in 2020 * Tax rate in 2020) + (Taxable income in 2021 * Tax rate in 2021) = ($158,000 * 40%) + ($195,000 * 45%) + ($92,100 * 45%) = $193,395
Deferred tax liability in 2019 = (Taxable income in 2020 * Tax rate in 2020) + (Taxable income in 2021 * Tax rate in 2021) = ($195,000 * 45%) + ($92,100 * 45%) = $129,195
Income tax payable in 2019 = Taxable income in 2019 * Tax rate in 2019 = $158,000 * 40% = $63,200
Income tax payable in 2020 = Taxable income in 2020 * Tax rate in 2020 = $195,000 * 45% = $87,750
Income tax payable in 2021 = Taxable income in 2021 * Tax rate in 2021 = $92,100 * 45% = $41,445
The journal entry will look as follows:
<u>Date                  General journal                  Debit ($)         Credit ($)    </u>
31 Dec 2019      Income tax expense          193,395  
                              Deferred tax liability                                129,195       
                              Income tax payable                                 63,200
<u><em>                            (To record income tax payable.)                                 </em></u>
31 Dec 2020     Deferred tax liability            87,750      
                              Income tax payable                                 87,750
<u><em>                            (To record income tax payable.)                                 </em></u>
31 Dec 2021     Deferred tax liability            41,445      
                              Income tax payable                                41,445
<u><em>                            (To record income tax payable.)                                 </em></u>