Answer:
The journal entries to prepare would be as follows:
Debit Credit
Deferred tax asset $5,000
Income tax expense $159,000
Income tax payable $164,000
Debit Credit
Income tax expense $25,000
Valuation Adjustement $25,000
Explanation:
The journal entries to prepare would be as follows:
Debit Credit
Deferred tax asset $5,000
Income tax expense $159,000
Income tax payable $164,000
Deferred tax asset=($400,000*20%)-$75,000
Deferred tax asset=$5,000
Income tax payable=$820,000*20%=$164,000
Income tax expense=$164,000-$5,000=$159,000
Debit Credit
Income tax expense $25,000
Valuation Adjustement $25,000
