CHANGES IN DEFERRED INCOME TAX LIABILITY. The deferred income tax liability reported by Stone Equipment Company is entirely the result of temporary differences related to depreciation expense. The following data are available for 19x4 and 19x5:

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ITEM Income taxes payable (at 12/31) Income taxes expense Deferred income tax liability (at 12/31) 19x4 19x5 $197,400 $260,300 211,000 248,500 43,900 32,100 The tax liability for each year is paid in a single payment shortly after year-end. REQUIRED: 1. Prepare the income tax entries for 19x4 and 19x5. 2. Explain why the deferred income tax liability declined between December 31, 19x4. and December 31, 19x5. 3. Explain in general terms the difference between income taxes payable and the deferred income tax liability.