On 1 January 20X7, Change Incorporated commenced business operations. At 31 December 20X9, the following...
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Accounting
On 1 January 20X7, Change Incorporated commenced business operations. At 31 December 20X9, the following information relates to Chang:
20X7
20X8
20X9
Earnings (loss) before tax
$
329,900
$
(481,100
)
$
775,000
Tax rate (enacted in each year)
30
%
35
%
40
%
Depreciation expense (asset cost was $710,000)
61,000
61,000
61,000
Capital cost allowance
213,000
0
89,000
Dividends received (nontaxable)
40,600
65,500
65,500
Golf club dues
10,700
10,700
10,700
Required: 1. Prepare journal entries to record tax for 20X7, 20X8, and 20X9. Assume that the loss carryforward usage in 20X8 is considered to be probable.
2. Prepare journal entries to record tax for 20X7, 20X8, and 20X9. Assume that the loss carryforward usage in 20X8 is not considered to be probable but is considered to be probable in 20X9.
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