Sheridan Inc. reports the following pretax income (loss) for both book and tax purposes.PretaxYear Income (Loss)$120,0002023202489,0002025 (87,000)2026120,000Tax Rate20%20%25%25%The tax rates listed were all enacted by the beginning of 2023. Prepare the journal entries for years 2023-2026 to record income tax expense (benefit) and income taxes payable (refundable),and the tax effects of the loss carryforward, assuming that based on the weight of available evidence, it is more likely than not thatone-half of the benefits of the loss carryforward will not be realized. (List all debit entries before credit entries. Credit account titles areautomatically indented when amount is entered. Do not indent manually. If rio entry is required, select "No Entry" for the account titles andenter O for the amounts. Record journal entries in the order presented in the problem.)Date Account Titles and Explanation026202320242025Income Tax ExpenseIncome Tax PayableIncome Tax ExpenseIncome Tax PayableIncome Tax Refund ReceivableDeferred Tax Asset(To record income taxes.)(To record income taxes.)(To record allowance.)(To record income taxes.)(To adjust allowance.)eTextbook and MediaDebit24,00017.800Credit24,00017,80000100

The deferred tax asset is created when the taxes to be paid as per income tax are lower than the…

Answered: Sheridan Inc. reports the following…

Sheridan Inc. reports the following pretax income (loss) for both book and tax purposes. Year 2023 2024 2025 2026 Pretax Income (Loss) $120,000 89,000 (87,000) 120,000 Tax Rate 20% 20% 25% 25%

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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The pretax financial income of x company differs from its taxable income throughout each of 4 years as follows Year. Pretax Financial Income. Taxable income. Tax rate 2020. 305,000. 173,000. 35% 2021. 349,000. 216,000. 20% 2022 358,000 277,000 20% 2023 429,000 615,000 20% Pretax fiancial income for each year includes a nondeductible exense of $29,100 (never deductible for tax purposes) The remainder of the difference between pretax fiancial income and taxable income in each period is due to one depreciation temporary difference. No deferred income taxes existed at the beginning of 2020. 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
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