The pretax accounting income $($loss$)$ for the Lily Peng Company is as follows for the years indicated:

Fiscal Year

Pretax Accounting Income $

Tax Rate

$20$X$2$

$165,000$

$30\mathrm{.}0\%$

$20$X$3$

$135,000$

$30\mathrm{.}0\%$

$20$X$4$

$60,000$

$35\mathrm{.}0\%$

$20$X$5$

$90,000$

$35\mathrm{.}0\%$

$20$X$6$

$120,000$

$40\mathrm{.}0\%$

$20$X$7$

$(90,000)$

$40\mathrm{.}0\%$

$20$X$8$

$(360,000)$

$45\mathrm{.}0\%$

$20$X$9$

$450,000$

$50\mathrm{.}0\%$

$20$X$2$ was Lily Peng's first year of operations. There are no other differences between pretax accounting income and taxable income for the years indicated. Lily Peng elects the loss carryback option.

Required:

$1.$ Prepare the journal entries for the years $20$X$8$ and $20$X$9$ to record income tax expense $($benefit$)$ and income tax payable $($refundable$)$ and the tax effect of the loss carryback and carryforward assuming that at the end of $20$X$8$ the benefits of the loss carryforwards are judged more likely than not to be realized in the future.

$2.$ Using the assumption in requirement #$1$ above prepare the Income Tax section of the $20$X$8$ and $20$X$9$ income statement beginning with the line Income$/$Loss before Income Tax

Expense.

$3.$ Prepare the journal entries for the years $20$X$8$ and $20$X$9$ assuming that based on the weight of evidence available, it is more likely than not that one fourth of the benefits of the caryforward will not be realized

$4.$ Using the assumption in requirement #$3$ above prepare the Income tax section of the $20$x$8$ and $20$x$9$ income statement beginning with the line Income$/$Loss before Income Tax

Expense.

Use the format:

Description. Debit. Credit.