Hayes Co. reported the following pretax financial income (loss) for the years 2011–2015.

2011             $240,000
2012               350,000
2013                 90,000
2014              (550,000)
2015                180,000

Pretax financial income (loss) and taxable income (loss) were the same for all years involved. The enacted tax rate was 34% for 2011 and 2012, and 40% for 2013–2015. Assume the carryback provision is used first for net operating losses.

Instructions
  (a) Prepare the journal entries for the years 2013–2015 to record income tax expense, income taxes payable (refundable), and the tax effects of the loss carryback and loss carryforward, assuming that based on the weight of available evidence, it is more likely than not that one-fifth of the benefits of the loss carryforward will not be realized.
  (b) Prepare the income tax section of the 2014 income statement, beginning with the line “Income (loss) before income taxes.”