Carter Inc. began operations in 2019. The company reported $130,000 of depreciation expense on its 2019 income statement and $128,000 in 2020. Carter Inc. deducted $140,000 for depreciation on its tax return in 2019 and $122,000 in 2020. The company reports a tax obligation of $45,150 for 2020 based on a tax rate of 25%.

REQUIRED:

a. Determine the temporary difference between the book value of depreciable assets and the tax basis of these assets at the end of 2019 and 2020.

b. Calculate the deferred tax liability at the end of each year.

c. Calculate the income tax expense for 2020.

d. Prepare a journal entry to record income tax for 2020 and post the entry to the appropriate T-accounts.