Hamilton Container Company reported the following income ( loss) information for the first four years of its operations:
There are no uncertainties about the realization of the net operating loss benefits. All tax rate changes were enacted as of the beginning of the year. All tax rate changes are not known until the year of change.
Required
a. Prepare the journal entry/ entries needed to record the annual tax provision for years 1 through 4.
b. Prepare a partial income statement for each year.
c. Prepare the footnote, in both dollars and percentages, required to reconcile Hamilton’s federal tax rate to its effective income tax rate each year.