Beilman Inc. reports the following pretax income (loss) for both book and tax purposes.

The tax rates listed were all enacted by the beginning of 2018.

Instructions

a. Prepare the journal entries for years 2018?2021 to record income tax expense (benefit) and income taxes payable (refundable), and the tax effects of the loss carryforward, assuming that based on the weight of available evidence, it is more likely than not that one-half of the benefits of the loss carryforward will not be realized.

b. Prepare the income tax section of the 2020 income statement beginning with the line ?Operating loss before income taxes.?

c. Prepare the income tax section of the 2021 income statement beginning with the line ?Income before income taxes.?

Transcribed Image Text:

Pretax Income (Loss) Tax Rate Year 2018 2019 $120,000 20% 90,000 (280,000) 20 25 25 2020 2021 120,000