Kyle Inc. incurred a net operating loss of $580,000 in 2020. Combined income for 2017, 2018, and 2019 was $460,000. The tax rate for all years is 30%.Assume that it is more likely than not that the entire tax loss carryforward will not be realized in future years.Assume that Kyle earns taxable income of $25,000 in 2021 and that at the end of 2021 there is still too much uncertainty to recognize a deferred tax asset.

1. Prepare the journal entries that are necessary at the end of 2021 assuming that Kyle does not use a valuation allowance account.
2. Prepare the journal entries that are necessary at the end of 2021 assuming that Kyle does use a valuation allowance account.