Recording Income Tax Journal Entry: Temporary and Permanent Differences Fox Corporation purchased a machine on January 1, 2020, that cost $80,000. 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 $300,000. The 2020 income statement also showed a $30,000 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. Note: Do not use negative signs with your answers, 2021 2022 2023 Equipment, Net GAAP basis Tax basis Difference between GAAP and tax bases $ Tax rate $ $ $ 35% 35% 356 35% b. Record the income tax journal entry on December 31, 2020. Note: List multiple debits (when applicable) in alphabetical order and list multiple credits (when applicable) in alphabetical order. Note: If the journal entry includes an extra line that is not required, select "N/A" as the account name and leave the Dr. and Cr. answers blank (zero) in the very last row of the journal entry. Date Account Name Dr. Cr. Dec 31, 2020 Check Accelerated Tax Depreciation Immediate Expensing for Tax Depreciation c. Repeat requirements a and b assuming instead that the machine is 100% expensed in 2020 for tax purposes. a. Prepare a schedule to determine deferred tax balances on December 31, for the years 2020 through 2024. Note: Do not use negative signs with your answers. 2020 2021 2022 2023 Equipment, Net GAAP basis Tax basis Difference between GAAP and tax bases Tax rate 35% 35% 35% 35% b. Record the income tax journal entry on December 31, 2020. Note: List multiple debits (when applicable) in alphabetical order and list multiple credits (when applicable) in alphabetical order. Note: If the journal entry includes an extra line that is not required, select "N/A" as the account name and leave the Dr. and Cr. answers blank (zero) in the very last row of the journal entry. Account Name Dr. Cr. Date Dec. 31, 2020 C