The pretax financial income of Cullumber Company differs from its taxable income throughout each of 4 years as follows. Pretax Year Financial Income Taxable Income Tax Rate 2025 $277,000 $184,000 35% 2026 291,000 233,000 20% 2027 336,000 272,000 20% 2028 402,000 560,000 20% Pretax financial income for each year includes a nondeductible expense of $32,900 (never deductible for tax purposes). The remainder of the difference between pretax financial income and taxable income in each period is due to one depreciation temporary difference. No deferred income taxes existed at the beginning of 2025. a) Your answer is correct. Prepare journal entries to record income taxes in all 4 years. Assume that the change in the tax rate to 20% was not enacted until the beginning of 2026. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation 2025 Income Tax Expense Income Tax Payable Deferred Tax Liability 2026 Deferred Tax Liability Income Tax Expense (To record the adjustment for the decrease in the enacted tax rate.) Income Tax Expense Deferred Tax Liability Income Tax Payable Debit 108465 18885 64780 Credit 64400 44065 18885 18180 46600 (To record income taxes for 2026.) 2027 Income Tax Expense Income Tax Payable Deferred Tax Liability 2028 Income Tax Expense 73780 86980 25020 Deferred Tax Liability Income Tax Payable 54400 19380 112000 (b) Your answer is partially correct. Prepare the income statement for 2026, beginning with income before income taxes. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Income before Income Taxes Income Tax Expense Deferred Current Adjustment CULLUMBER COMPANY Income Statement (Partial) For the Year Ended December 31, 2026 $ Net Income/(Loss) $ $ The pretax financial income of Cullumber Company differs from its taxable income throughout each of 4 years as follows. Pretax Year Financial Income Taxable Income Tax Rate 2025 $277,000 $184,000 35% 2026 291,000 233,000 20% 2027 336,000 272,000 20% 2028 402,000 560,000 20% Pretax financial income for each year includes a nondeductible expense of $32,900 (never deductible for tax purposes). The remainder of the difference between pretax financial income and taxable income in each period is due to one depreciation temporary difference. No deferred income taxes existed at the beginning of 2025. a) Your answer is correct. Prepare journal entries to record income taxes in all 4 years. Assume that the change in the tax rate to 20% was not enacted until the beginning of 2026. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation 2025 Income Tax Expense Income Tax Payable Deferred Tax Liability 2026 Deferred Tax Liability Income Tax Expense (To record the adjustment for the decrease in the enacted tax rate.) Income Tax Expense Deferred Tax Liability Income Tax Payable Debit 108465 18885 64780 Credit 64400 44065 18885 18180 46600 (To record income taxes for 2026.) 2027 Income Tax Expense Income Tax Payable Deferred Tax Liability 2028 Income Tax Expense 73780 86980 25020 Deferred Tax Liability Income Tax Payable 54400 19380 112000 (b) Your answer is partially correct. Prepare the income statement for 2026, beginning with income before income taxes. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Income before Income Taxes Income Tax Expense Deferred Current Adjustment CULLUMBER COMPANY Income Statement (Partial) For the Year Ended December 31, 2026 $ Net Income/(Loss) $ $