At the end of Year $5,$ its first year of operations, Swelland Company reported a pretax operating loss of $$32,000$ for both financial reporting and income tax purposes. At that time,

Swelland had no positive verifiable evidence that it would earn future taxable income. However, due to successful management, the company reported pretax operating income $($and

taxable income$)$ of $$70,000$ in Year $6.$ During both years, the income tax rate was $30\%,$ and no change had been enacted for future years.

Required:

Prepare Swelland's income tax journal entries at the end of Year $5.$

Prepare Swelland's income tax journal entry at the end of Year $6.$

Prepare the lower portion of Swelland's Year $6$ income statement.