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The pretax financial income of Flounder Company differs from its taxable income throughout each of 4 years as follows. Year 2020 2021 2022 Pretax Financial
The pretax financial income of Flounder Company differs from its taxable income throughout each of 4 years as follows. Year 2020 2021 2022 Pretax Financial Income $300,000 342,000 355,000 452,000 Taxable income $196,000 248,000 278,000 540,000 Tax Rate 35 % 20 % 20 % 20 % 2023 Pretax financial income for each year includes a nondeductible expense of $31,100 (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 2020. Part 1 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 2021. (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 for the amounts.) Date Account Titles and Explanation Debit Credit 2020 Income Tax Expense Deferred Tax Liability Income Tax Payable 021 (To record the adjustment for the decrease in the enacted tax rate.) (To record income taxes for 2021.) 2022 2023 Part 2 Prepare the income statement for 2021, beginning with income before income taxes. (Enter negative amounts using either a negative sign preceding the number eg. -45 or parentheses eg. (45).) Flounder Company Income Statement (Partial) $ $
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