Directions: After reading the companys background information in each scenario, complete the corresponding tasks.

Scenario 1:

Pull Company has GAAP income of $500,000 and taxable income of $500,000. Prepare the entry to record the income tax expense if they have a 40% tax rate.

Scenario 2:

The following information pertains to Bright Company:

Prepare the entries to record the income tax expense for each year (2012-2014).

Scenario 3:

The following information pertains to Seal Company

Prepare the entries to record the Income tax expense for each year (2012-2014).

Scenario 4: Bonus Company had the following income/loss in the last three years:

Scenario 4: Bonus Company had the following income/loss in the last three years:

Prepare the entry for 2012 using a carryback.

Prepare the entry for 2012 using a carryforward assuming a future tax rate of 40%.

GAAP INCOME 2012 2013 2014 Revenues -Expenses Pretax Financial Income Income Tax Expense (40%) 2,000,000 2,500,0003,000,000 1,400,000 1,600,0002,000,000 900,000 360,000 600,000 240,000 1,000,000 400,000 Taxable Income 2012 2013 2014 1,700,000 2,600,000 3,200,000 1,400,000 1,600,0002,000,000 1,200,000 480,000 Revenues Expenses Taxable Income Income Tax Expense (40%) 00,0001,000,000 400,000 120,000