Jayryan Company sells products in a volatile market. The company began operating in 2005 and reported (and paid taxes on) taxable income in 2005 and 2006. It has one taxable temporary difference (future taxable amount), and reconciled its taxable income to its pretax financial income for 2005 and 2006 as follows:

In 2007, because of a downturn in the market, the company reported a taxable loss of $90,000 and it was uncertain as to future profits. A temporary difference of $2,700 resulted in an $87,300 pretax operating loss for financial reporting. In 2008 and 2009 the company was again profitable and reported the following items:

The income tax rate has been 30% since 2003 and no change in the tax rate has been enacted for future years.
Required
1. Prepare a schedule that shows the Jayryan Company's income taxes payable (or receivable) for each year, 2005 through 2009.
2. Prepare a schedule that shows the deferred tax information (change in temporary difference and operating loss carryforward) for each year, 2005 through 2009.
3. Prepare a schedule that shows the deferred taxes for each year, 2005 through 2009.
4. Based on the schedule prepared in Requirement 3, prepare the income tax journal entry at the end of 2007.
5. Prepare a partial income statement for 2007. Include a note for any operating losscarryforward.

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2005 $25,000 2006 $53,000 Taxable income Temporary diffrnce 2,5004.800 Pretax financial income $27,500 emporary clifference $57,800 2008 $7,000 2,300 2009 $19,000 Taxable income Temporary diference2 2,800 Pretax financial income $9.300 $21,800