Answer and Explanation:
The Journal entry is shown below:-
Income tax expense Dr, $40,025
To Deferred tax liability $2,025
To Income tax payable $38,025
(Being income taxes for the year 2020 is recorded)
Working note:-
Excess depreciation = ($27,000 × 50%) - ($27,000 ÷ 4)
= $13,500 - $6,750
= $6,750
For Deferred tax liability = $6,750 × 30%
= $2,025
For Income tax payable = ($157,000 - $23,500 - $6,750) × 30%
= $126,750 × 30%
= $38,025
