Recording Income Tax Journal Entry: Temporary and Permanent Differences Fox Corporation purchased a machine onJanuary 1, 2020, that cost $40,000. The machine had an estimated service life offive years and no residual value. Fox uses straight-line depreciation for accounting purposes and accelerated depreciation for the income tax return as follows: 2020, 30%; 2021, 25%; 2022, 20%; 2023, 15%; and 2024, 10%. Taxable income on the tax return for 2020 was $150,000. The 2020 income statement also showed a $15,000 expense for premiums paid for life insurance policies on company executive officers. The income tax rate is 25% in 2020 and 35% in all subsequent years. Accelerated Tax Depreciation Immediate Expensing for Tax Depreciation a. Prepare a schedule to determine deferred tax balances on December 31, for the years 2020 through 2024. a Note: Do not use negative signs with your answers. Equipment, Net 2020 2021 2022 2023 GAAP basis l$ 52,500 x s 20 x $ 40 x s 40 x Tax basis l 52,500 xl 20 x 20 a\" o a: Difference between GAAP and tax bases '$ 20 x ' S 20 at $ 40 x ' s O 3: Tax rate 35% l 35% 35% l 35% Deferred taxliability, ending balance : 31s 20 xls 20 x s 420 xl$ 420 x b. Record the income taxjournal entry on December 31,2020. 0 Note: List multiple debits (when applicable) in alphabetical order and list multiple credits (when applicable) in alphabetical order. a Note: Ifthe journal entry includes an extra line that is not required, select "MA" as the account name and leave the Dr. and Cr. answers blank (zero) in the very last row of thejournal entry. Account Name Dec. 31,2020 Income Tax Expense 0/ 37,500 x 0 v o l 20 x c v o l 37,500 v Check Deferred Tax Liability Income Tax Payable