A17-20 Loss Carryback/Carryforward; Temporary Differences; Rate Change (LO 17-2, 17-3, 17-4, 17-6) On 1 January 20X4, Dart Incorporated commenced business operations. The following information is available to you: Earnings (loss) before tax Tax rate (enacted in each year) Depreciation (original cost of assets, $900,000) Capital cost allowance Rental revenue recognized* 20X4 $80,000 34% 20X5 $(470,000) 20X6 $130,000 20X7 $150,000 45,000 54,000 34% 45,000 30% 45,000 108,000 28% 45,000 98,000 54,000 *There is a rent receivable account at the end of 20X4, because rent revenue was earned in 20X4 but will not be collected until 20X6. This amount is not part of taxable income in 20X4, but will be taxable income in 20X6 when it is collected. Required: Prepare journal entries to record tax for 20X4, 20X5, 20X6, and 20X7. Assume that the tax loss carryforward usage in 20X5 is considered to be not probable but that in 20X6 the balance of probability shifts and in 20X6 the loss usage is considered to be probable. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Answer is not complete. No 1 Date 20X4 General Journal Debit Credit Income tax expense 27,200 Deferred income tax 7,560 Tax payable 19,640 2 20X5 Tax payable 8,080 x Income tax expense (recovery) 8,080 3 20X6 Income tax expense 37,440 Tax payable 37,440 Deferred income tax 4,860 Income tax expense (recovery) 4,860 4 20X6 Deferred income tax 4,860 x Income tax expense (recovery) 4,860 5 20X7 Income tax expense 43,500 Tax payable 43,500 6 20X7 Income tax expense Tax payable 43,500 43,500 Journal entry worksheet 1 2 3 4 5 6 Record entry for current and deferred income tax expense payable. Note: Enter debits before credits. Date 20X4 Lasn General Journal Debit Credit Deferred income tax Income tax expense Income tax expense (recovery) Tax payable Record e Tax receivable View transaction list Journal entry worksheet 1 2 3 4 5 6 Record entry for current income tax benefit recoverable. Note: Enter debits before credits. Date 20X5 Cash View general journal General Journal Debit Credit Deferred income tax Income tax expense Income tax expense (recovery) Tax payable Record e Tax receivable View general journal Journal entry worksheet < 2 3 4 5 6 Record entry for current and deferred income tax expense payable. Note: Enter debits before credits. Date 20X6 Cash General Journal Debit Credit Deferred income tax Income tax expense Income tax expense (recovery) Tax payable Record e Tax receivable View transaction list Journal entry worksheet < 1 23 4 5 6 Record entry for current income tax benefit recoverable. Note: Enter debits before credits. Date 20X6 Cash View general journal General Journal Debit Credit Deferred income tax Income tax expense Income tax expense (recovery) Tax payable Record e Tax receivable View general journal > Journal entry worksheet 1 2 3 4 5 6 Record entry for current and deferred income tax expense payable. Note: Enter debits before credits. Date 20X7 Cash General Journal Debit Credit Deferred income tax Income tax expense Income tax expense (recovery) Tax payable Record e Tax receivable View general journal > Journal entry worksheet 2 3 4 5 Record entry for set-off of current income tax expense payable against loss carryforward. Note: Enter debits before credits. Date 20X7 Cash General Journal Debit Credit Deferred income tax Income tax expense Income tax expense (recovery) Tax payable Record e Tax receivable View general journal