Could anyone help me solve the problem 2? It is in attached file.

AMIS 3201 S2017 Group Assignment Ch 16 1. In 2017, Quaker purchased a fixed asset at $320,000. The operational asset has a four-year life and no residual value. The straight-line method is used for financial reporting purposes. For the tax purposes, the asset will be depreciated in the following amount. ACCT Depreciation TAX Depreciation 2017 2018 2019 2020 2021 $80,000 $50,000 $80,000 $70,000 $80,000 $90,000 $80,000 $110,000 $80,000 $80,000 Included in the 2017 pretax income was $60,000 interest revenue from investments in municipal bonds, which is not taxable and yields a permanent difference. The 2018 income does not include $90,000 of subscription fee received that year for three year subscriptions. The subscription revenue is reported in 2018 for tax purposes. The revenue will be earned in 2019-2021. Included in the 2019 pretax income was an installment sale of property in the amount of $40,000, which Quaker reports, for tax purposes, in the year cash was collected in 2019-2020. Pretax Income permanent difference municipal bond revenue temporary difference depreciation subscription revenue Installment sales Taxable income 2017 2018 2019 2020 2021 $1,000,000 $800,000 $1,200,000 $950,000 $900,000 $30,000 $10,000 $90,000 $970,000 $900,000 ($10,000) ($30,000) ($40,000) $1,120,000 ($30,000) ($30,000) $20,000 $910,000 $0 ($30,000) $20,000 $890,000 ($60,000) These permanent and temporary differences are summarized as follows: There were no temporary differences before 2017. The enacted tax rate for 2017 and beyond was 40%. Both the accounting and income tax periods end December 31. (Enter your answers in DOLLARS. Round your final answers to the nearest dollar amount.) (1) Referring to the following tax worksheets for 2017, prepare similar worksheets for 20182020. AMIS 3201 S2017 Group Assignment Ch 16 2017 pretax income permanent diff municipal bond revenue temporary diff depreciation Taxable income income tax payable 2018 2019 2020 2021 SUM DTL DTA $1,000,000 ($60,000) $30,000 $970,000 40% $10,000 $388,000 $4,000 $0 ($10,000 ) ($30,000) 40% 40% $0 40% 40% ($4,000) ($12,000) $0 $0 $0 $0 DTA ($12,000 ) $0 EB BB Change $12,000 $0 $0 0 $0 $12,000 0 $12,000 (2) Prepare the year-end journal entries to record income taxes for the years 2017-2020. 12/31/2017 Income tax expense 376000 Deferred tax asset 12000 Income tax payable 388000 12/31/2018? 12/31/2019? 12/31/2020? (3) Suppose that during 2018 new tax legislation was passed reducing the tax rate to 25% for the years 2019 and beyond. Prepare the worksheets for 2018-2020 (similar to the ones in (1)), and record year-end journal entries for 2018-2020. 2. EJ Company's taxable income in four previous years of operation was as follows. EJ elects the carryback option. 2013 2014 2015 2016 AMIS 3201 S2017 Group Assignment Ch 16 taxable income tax rate $400,000 40% $500,000 40% $300,000 40% $200,000 40% In 2017, EJ reported a pretax operating loss for financial reporting purposes. The loss includes two temporary differences: (a) an installment sales revenue of $200,000 which will be taxable when the payments are received $100,000 each in 2018-2019, and (b) warranty expense of $65,000. $20,000 of the warranty expense will be tax deductible when paid in 2018, and the rest $45,000 be tax deductible when paid in 2019. The enacted tax rate in 2017 and beyond is 40%. There were no temporary differences at the beginning of the year and none originating in 2018-2019 other than those described above. (Enter your answers in DOLLARS. Round your final answers to the nearest dollar amount.) (1) EJ Company's pre-tax incomes in 2017-2019 of operation were as follows. 2017 ($600,000) Pre-tax income 2018 $400,000 2019 $300,000 The tax worksheets for 2017-2019 are given below. Note that the format differs when there is a taxable loss. 2015 2016 Pretax Income temporary difference ($200,000 ) $65,000 ($735,000 ) Installment sales warranty expense taxable loss loss carryback ($300,000 ) ($200,000 ) loss carryforward Taxable income income tax refund 2017 ($600,000 ) 40% 40% ($120,000 ($80,000) ) ($200,000) 2018 2019 SUM $100,000 ($20,000) $100,000 DTL ($45,000) DTA ($235,000 ) DTA DTL DTA $500,000 $235,000 $0 40% 40% ($102,000 ) $40,000 40% ($18,000) $40,000 ($120,000 ) $80,000 $120,00 0 $80,000 EB BB $80,000 0 Change $80,000 $120,00 0 0 $120,00 0 AMIS 3201 S2017 Group Assignment Ch 16 2018 400,000 Pretax Income temporary difference Installment sales warranty expense taxable loss loss carryback loss carryforward Taxable income Income tax payable Pretax Income temp diff: Installment sales warranty expense taxable loss loss carryback loss carryforward Taxable income Income tax payable 2019 SUM $100,000 ($20,000) $100,000 DTL ($45,000) DTA ($235,000) $245,000 40% $98,000 DTA 40% ($18,000) $40,000 2019 $300,000 DTL DTA ($18,000) $40,000 EB BB Change $40,000 $40,000 $80,000 ($40,000) DTL DTA SUM $18,000 $18,000 $120,000 ($102,000) $100,000 DTL ($45,000) DTA $355,000 40% $142,000 $0 $0 EB BB Change $0 $0 $0 $40,000 ($40,000) $0 $18,000 ($18,000) Prepare the journal entries to recognize the income tax benefit or expense in 2017-2019. (2) Suppose that EJ Company's pre-tax incomes in 2017-2019 of operation were as follows instead. pre-tax income 2017 ($300,000) (2-1) Prepare the tax worksheets for 2017-2019. (2-2) What was the loss carryforward amount in 2019? 2018 $100,000 2019 ($400,000) AMIS 3201 S2017 Group Assignment Ch 16 (2-2) Prepare the journal entries to recognize the income tax benefit or expense in 2017-2019. 3. Global Company's taxable incomes in two previous years of operation are as follows. Global elects the carryback option. taxable income tax rate 2013 $500,000 45% 2014 $600,000 45% 2015 $400,000 40% 2016 $300,000 40% Global reported a pre-tax income as follows in 2017-2020. The enacted tax rate is 40% in 2017 and beyond. pre-tax income tax rate 2017 ($100,000 ) 40% 2018 $300,00 0 40% 2019 ($400,000 ) 40% 2020 $200,00 0 40% There were no temporary differences at the beginning of 2017 originated from past years. The following permanent and temporary differences are incurred in 2017-2019. There was no differences newly originating in 2020. Both deferred tax asset and liability had 0 balances at the beginning of 2017. 2017 (a) Depreciation is reported by the straight-line method assuming a four-year useful life for a car acquired in 2017 at a cost of $100,000. On the tax return, deductions for depreciation will be as in the following table: Depreciation expense recognized Depreciation for tax purposes 2017 $25,000 $30,000 2018 $25,000 $35,000 2019 $25,000 $20,000 2020 $25,000 $10,000 (b) Paid a total of $30,000, which is all tax deductible in 2017, as a prepaid rent for renting a facility for three years in 2018-2020. 2018 (a) Included in the 2018 income was $25,000 interest revenue from investments in municipal bonds, which is not taxable and yields a permanent difference. (b) Installment sales revenue of $50,000 was recognized which will be taxable when the payments are received. $30,000 will be received in 2019, and the rest will be received in 2020. 2019 (a) Warranty expense of $65,000 was included in the 2019 pretax income. The warranty expense will be tax deductible when paid in 2020. AMIS 3201 S2017 Group Assignment Ch 16 (Enter your answers in DOLLARS. Round your final answers to the nearest dollar amount.) (1) For each of temporary difference, determine whether the difference would yield changes in DTL or DTA. Note that the determination is made only once in the year the difference is initially originated. (2) Prepare the tax worksheets for 2017-2020. Hint: For 2017-2020, the ending balances of DTL and DTA are as follows. DTL DTA 2017 $16,000 $0 2018 $36,000 $0 (3) Prepare the journal entries for 2017-2020. 2019 $18,000 $52,000 2020 $0 $0