Chapter 17, Problem 17.13E

Net Operating Loss, Carryforward. Loggins Lumber Company experienced net losses during the first 2 years of its operations Year 3 was the company's first profitable year. Loggins uses the same accounting methods for financial reporting and its tax returns. The company always elects the carryback/carryforward option. Management examined all available evidence, both positive and negative, and has determined that it is more likely than not that all of the carryforward tax benefits are fully realizable The following information is taken from the company’s financial records for the first 4 years of its operations.

Year	Income (Loss) before Tax	Tax Rate (%)
1	$(380,000)	34%
2	(135,000)	34
3	425,000	34
4	585,000	34

Required

1. a. Prepare the journal entries needed to record the tax provision for Years 3 and 4
2. b. Prepare partial income statements for all 4 years
3. c. What is the balance of the deferred tax account at the end of Year 3?