Exercise 19-22

Sarasota Corporation has pretax financial income (or loss) equal to taxable income (or loss) from 2009 through 2017 as follows:

		Income (Loss)			Tax Rate
2009		$36,540			30	%
2010		50,400			30	%
2011		21,420			35	%
2012		60,480			50	%
2013		(189,000	)		40	%
2014		113,400			40	%
2015		37,800			40	%
2016		132,300			40	%
2017		(75,600	)		45	%

Pretax financial income (loss) and taxable income (loss) were the same for all years since Sarasota has been in business. Assume the carryback provision is employed for net operating losses. In recording the benefits of a loss carryforward, assume that it is more likely than not that the related benefits will be realized.

What entries for income taxes should be recorded for 2013?

Indicate what the income tax expense portion of the income statement for 2013 should look like. Assume all income (loss) relates to continuing operations.

What entry for income taxes should be recorded in 2014?

How should the income tax expense section of the income statement for 2014 appear?