Fox Corporation purchased a machine on January 1,2020 , that cost \(\$ 40,000\). The machine had an estimated service life of five 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.

Required

a. Prepare a schedule to determine deferred tax balances on December 31, for the years 2020 through 2024.

b. Record the income tax journal entry on December 31, 2020.

c. Repeat requirements \(a\) and \(b\) assuming instead that the machine is \(100 \%\) expensed in 2020 for tax purposes.