On December 31, 2020, Colgait Inc. had an installment sale receivable balance of \(\$ 90,000\) recognized on its financial statements, while the amount was not recognized for tax purposes. Colgait Inc. also had a warranty accrual of \(\$ 20,000\) on December 31,2020 , that is not deductible for tax purposes. The accounts receivable will be settled equally over the next three years. The warranty will be settled equally over the next two years. Taxable income in 2020 was \(\$ 500,000\). Enacted tax rates are \(25 \%\) for years \(2020-2021\), and \(30 \%\) for years thereafter.

Required

a. Prepare a schedule to compute deferred tax balances as of December \(31,2020\).

b. Prepare the journal entry to record income tax expense in 2020 , assuming zero beginning balances in deferred tax accounts.