For 2020, Trendy Inc. calculated taxable income of \(\$ 30,000\) after taking into account one temporary difference: prepaid insurance expense on a GAAP basis exceeds prepaid insurance on a tax basis by \(\$ 5,000\). The tax rate is \(25 \%\) and there were no balances in deferred tax accounts at the beginning of 2020.

Required

a. Indicate the deferred income tax amount that would be recognized on the balance sheet on December 31,2020.

b. Prepare the income tax section of the income statement for 2020 and provide the disclosure of current and deferred tax expense.