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During 2024, its first year of operations, Baginski Steel Corporation reported a net operating loss of $360,000 for financial reporting and tax purposes. During 2025,
During 2024, its first year of operations, Baginski Steel Corporation reported a net operating loss of $360,000 for financial reporting and tax purposes. During 2025, Baginski reported income of $200,000 for financial reporting and tax purposes. The enacted tax rate is 25%.
Required:
- Prepare the journal entry to recognize Baginskis 2025 tax expense or tax benefit.
- Show the lower portion of the 2025 income statement that reports income tax expense or benefit.
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