Jayryan Company sells products in a volatile market. The company began operating in 2017 and reported (and paid taxes on) taxable income in 2017 and 2018. It has one taxable temporary difference (future taxable amount) and reconciled its taxable income to its pretax financial income for 2017 and 2018 as follows: Taxable income2017-$25,0002018-$53,000Temporary difference2017-2,5002018-4,800Pretax financial income2017-$27,5002018-$57,800 In 2019, because of a downturn in the market, Jayryan reported a taxable loss of $90,000, and it was uncertain as to future profits. A temporary difference of $2,700 resulted in an $87,300 pretax operating loss for financial reporting. In 2020 and 2021, Jayryan was again profitable and reported the following items: Taxable income2020-$57,0002021-$69,000Temporary difference2020-2,3002021-2,800Pretax financial income2020-$59,3002021-$71,800 The income tax rate has been 30% since 2017, and no change in the tax rate has been enacted for future years.Required:1. Prepare a schedule that shows Jayryan’s income taxes payable (or receivable) for each year, 2017 through 2021.2. Prepare a schedule that shows the deferred tax information (change in temporary difference and operating loss carryforward) for each year, 2017 through 2021.3. Prepare a schedule that shows the deferred taxes for each year, 2017 through 2021.4. Based on the schedule prepared in Requirement 3, prepare Jayryan’s income tax journal entry at the end of 2019.5. Prepare a partial income statement for 2019. Include a note for any operating loss carryforward.
Jayryan Company sells products in a volatile market. The company began operating in 2017 and reported (and paid taxes on) taxable income in 2017 and 2018. It has one taxable temporary difference (future taxable amount) and reconciled its taxable income to its pretax financial income for 2017 and 2018 as follows:
Taxable income
2017-$25,000
2018-$53,000
Temporary difference
2017-2,500
2018-4,800
Pretax financial income
2017-$27,500
2018-$57,800
In 2019, because of a downturn in the market, Jayryan reported a taxable loss of $90,000, and it was uncertain as to future profits. A temporary difference of $2,700 resulted in an $87,300 pretax operating loss for financial reporting. In 2020 and 2021, Jayryan was again profitable and reported the following items:
Taxable income
2020-$57,000
2021-$69,000
Temporary difference
2020-2,300
2021-2,800
Pretax financial income
2020-$59,300
2021-$71,800
The income tax rate has been 30% since 2017, and no change in the tax rate has been enacted for future years.
Required:
1.
Prepare a schedule that shows Jayryan’s income taxes payable (or receivable) for each year, 2017 through 2021.
2.
Prepare a schedule that shows the deferred tax information (change in temporary difference and operating loss carryforward) for each year, 2017 through 2021.
3.
Prepare a schedule that shows the
4.
Based on the schedule prepared in Requirement 3, prepare Jayryan’s income tax
5.
Prepare a partial income statement for 2019. Include a note for any operating loss carryforward.
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