Recording a Temporary Difference On December 31, for GAAP purposes, Clubs Inc. reported a balance of $400,000 in a warranty liability for anticipated costs to satisfy future warranty claims. The tax basis for the warranty liability is zero. No claims were paid during the year. The increase to income tax payable on December 31 is $850,000, and the tax rate is 25%. Assume no other differences between the tax basis and GAAP basis of assets and liabilities, or any beginning balances in deferred tax accounts. Required a. Record the income tax journal entry on December 31. eNote: If aline in a journal entry isn't required for the transaction, in the last line of the journal entry, select "N/A" as the account name and leave the Dr. and Cr. answers blank (zero). Date Account Name Dr. Cr. Dec. 31 Income Tax Expense v 312,500 0 x Deferred Tax Liability v 0 100,000 x Income Tax Payable v 0 212,500 x N/A v 0 0v To record income tax expense b. Assume that there was a January 1 beginning balance of $40,000 in the deferred tax asset account. How would your answer to part a change? eNote: If aline in a journal entry isn't required for the transaction, in the last line of the journal entry, select "N/A" as the account name and leave the Dr. and Cr. answers blank (zero). Date Account Name Dr. (o Dec. 31 Income Tax Expense v 272,500 0 x Deferred Tax Liability v 0 60,000 x Income Tax Payable v 0 212,500 % N/A \\% 0 0wv To record income tax expense