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