The pretax financial income of Lancer Company differs from its taxable income throughout each of 4 years as follows.

Year Pretax Financial Income Taxable Income Tax Rate

2014 $297,800 $180,700 37 %

2015 321,600 229,900 42 %

2016 350,800 265,400 42 %

2017 422,800 565,900 42 %

Pretax financial income for each year includes a nondeductible expense of $31,500 (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 2014.

(a) Prepare journal entries to record income taxes in all 4 years. Assume that the change in the tax rate to 42% was not enacted until the beginning of 2015.

(b) Prepare the income statement for 2015, beginning with income before income taxes.