Ross Company has been in business for several years, during which time it has been profitable. For each of those years, Ross reported (and paid taxes on) taxable income in the same amount as pretax financial income based on the following revenues and expenses:

	Revenues	Expenses
2017	$253,000	$180,000
2018	241,000	196,000

Ross was subject to the following income tax rates during this period: 2017, 30%; and 2018, 25%. During 2019, Ross experienced a severe decrease in the demand for its products. The company tried to offset this decrease with an expensive marketing campaign, but was unsuccessful. Consequently, at the end of 2019, Ross determined that its revenues were $60,000 and its expenses were $193,000 for both income taxes and financial reporting.

At the end of 2019 due to increasing competition, Ross deemed that it was more likely than not that 50% of the future deductible amount will not be realized. The income tax rate was 21% for the entire period, and no change in the tax rate had been enacted for future years.

In 2020, Ross developed and introduced a new product that proved to be in high demand. For 2020, Ross reported revenues of $181,000 and expenses of $155,000 for both income taxes and financial reporting. The applicable income tax rate was 21%.

Required:

1	Prepare the income tax journal entry at the end of 2020.
2.	Prepare Rosss 2020 income statement.

expenses were $193,000 for both income taxes and financial reporting.

At the end of 2019 due to increasing competition, Ross deemed that it was more likely than not that 50% of the future deductible amount will not be realized. The income tax rate was 21% for the entire period, and no change in the tax rate had been enacted for future years.

In 2020, Ross developed and introduced a new product that proved to be in high demand. For 2020, Ross reported revenues of $181,000 and expenses of $155,000 for both income taxes and financial reporting. The applicable income tax rate was 21%.

Required:

1.	Prepare Rosss income tax journal entries at the end of 2019.
2.	Prepare Rosss 2019 income statement. Include a note for any operating loss carryforward.
3.	Prepare the income tax journal entry at the end of 2020.
4.	Prepare Rosss 2020 income statement.

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Income Statements

Shaded cells have feedback.

2. Prepare Rosss 2019 income statement. Include a note for any operating loss carryforward.

Income Statements Instructions

Score: 18/49

ROSS COMPANY

Income Statement

For Year Ended December 31, 2019

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Points:

3.67 / 10

4. Prepare Rosss 2020 income statement.

Income Statement Instructions

Score: 49/49

Income Statements

Shaded cells have feedback.

2. Prepare Rosss 2019 income statement. Include a note for any operating loss carryforward.

Income Statements Instructions

Score: 18/49

ROSS COMPANY

Income Statement

For Year Ended December 31, 2019

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5