The pretax financial income of Tamarisk Company differs from its taxable income throughout each of 4 years as follows.Year PretaxFinancial Income Taxable Income Tax Rate2020 $295,000 $180,000 35%2021 320,000 217,000 20%2022 335,000 264,000 20%2023 435,000 592,000 20%Pretax financial income for each year includes a nondeductible expense of $29,300 (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 2020. Prepare journal entries to record income taxes in all 4 years. Assume that the change in the tax rate to 20% was not enacteduntil the beginning of 2021. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If noentry is required, select "No Entry" for the account titles and enter O for the amounts.)Date Account Titles and ExplanationDebitCredit20202021(To record the adjustment for the decrease in the enactedtax rate.)(To record income taxes for 2021.)2022 2021(To record the adjustment for the decrease in the enactedtax rate.)(To record income taxes for 2021.)20222023

The decrease in the tax rate for the second year would result in a decrease in deferred tax…

Answered: The pretax financial income of Tamarisk…

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 Tamarisk Company differs from its taxable income throughout each of 4 years as follows.

Year	Pretax Financial Income	Taxable Income	Tax Rate
2020	$295,000	$180,000	35	%
2021	320,000	217,000	20	%
2022	335,000	264,000	20	%
2023	435,000	592,000	20	%

Pretax financial income for each year includes a nondeductible expense of $29,300 (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 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. (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.)
Date Account Titles and Explanation
Debit
Credit
2020
2021
(To record the adjustment for the decrease in the enacted
tax rate.)
(To record income taxes for 2021.)
2022

2021
(To record the adjustment for the decrease in the enacted
tax rate.)
(To record income taxes for 2021.)
2022
2023

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