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,(One Temporary Difference, Tracked for 4 Years, One Permanent Difference, Change in Rate) The ,pretax financial income of ,Truttman, Company differs from its taxable income throughout each of 4 years ,as follows.,Pretax Taxable,Year Financial Income Income Tax Rate,2014 $290,000 $180,000 35%,2015 320,000 225,000 40%,2016 350,000 260,000 40%,2017 420,000 560,000 40%,Pretax financial income for each year includes a nondeductible expense of $30,000 (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.,Instructions,(a) Prepare journal entries to record income taxes in all 4 years. Assume that the change in the tax rate,to 40% was not enacted until the beginning of 2015.,(b) Prepare the income statement for 2015, beginning with Income before income taxes.,
This question was answered on: Oct 21, 2020
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