Burlings Lumber Company experienced net losses during the first two years of its operations. Year 3 was the company's first profitable year. Burlings uses the same accounting methods for financial reporting and its tax returns. The company always elects the carryback/carryforward option. Management examined all available evidence, both positive and negative, and has determined that it is more likely than not that all of the carryforward tax benefits are fully realizable. The following information is taken from the company's financial records for the first four years of its operations:

	Income (Loss)
Year	Before Tax		Tax Rate
1	$(340,000)		34%
2	(105,000)		34%
3	370,000		34%
4	545,000		34%

A.	Prepare the journal entries needed to record the tax provision for years 3 and 4.
B.	Prepare partial income statements for all four years.
C.	What is the balance of the deferred tax account at the end of year 3 and how should Burlings classify it on the balance sheet?