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ear 023 1024 025 1026 Pretax Income (Loss) $119,000 112,000 (220,000) 300,000 Tax Rate 17% 17% 19% 19% e tax rates listed were all enacted by the beginning of 2023.

ear 023 1024 025 1026 Pretax Income (Loss) $119,000 112,000 (220,000) 300,000 Tax Rate 17% 17% 19% 19% e tax rates listed were all enacted by the beginning of 2023.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Sandhill Inc. reports the following pretax income (loss) for both financial reporting purposes and tax purposes. Pretax Income (Loss) Year 2023 2024 2025 (220,000) 2026 300,000 $119,000 112,000 Tax Rate 17% 17% 19% 19% The tax rates listed were all enacted by the beginning of 2023.
Transcribed Image Text:Sandhill Inc. reports the following pretax income (loss) for both financial reporting purposes and tax purposes. Pretax Income (Loss) Year 2023 2024 2025 (220,000) 2026 300,000 $119,000 112,000 Tax Rate 17% 17% 19% 19% The tax rates listed were all enacted by the beginning of 2023.
Prepare the journal entries for 2025 and 2026, assuming that based on the weight of available evidence, it is more likely than not that one-fourth of the benefits of the loss carryforward will not be realized. (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 Deferred Tax Asset Income Tax Expense 2026 (To record income taxes.) Income Tax Expense Allowance to Reduce Deferred Tax Asset to Expected Realiz (To record allowance.) Show Transcribed Text Income Tax Expense Income Tax Payable Deferred Tax Asset (To record income taxes.) Allowance to Reduce Deferred Tax Asset to Expected Realiz Income Tax Expense (To adjust allowance.) (* Debit 57000 Credit TO UO 10 00
Transcribed Image Text:Prepare the journal entries for 2025 and 2026, assuming that based on the weight of available evidence, it is more likely than not that one-fourth of the benefits of the loss carryforward will not be realized. (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 Deferred Tax Asset Income Tax Expense 2026 (To record income taxes.) Income Tax Expense Allowance to Reduce Deferred Tax Asset to Expected Realiz (To record allowance.) Show Transcribed Text Income Tax Expense Income Tax Payable Deferred Tax Asset (To record income taxes.) Allowance to Reduce Deferred Tax Asset to Expected Realiz Income Tax Expense (To adjust allowance.) (* Debit 57000 Credit TO UO 10 00
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