Alliance Inc. reports the following incomes (losses) for both book and tax purposes (assume the carryback provision is used where possible):

The tax rates listed were all enacted by the beginning of 2009.

Instructions

(a) Prepare the journal entries for each of the years 2009 to 2012 to record income taxes.

(b) Prepare the income tax section of the income statements for each of the years 2009 to 2012, beginning with the line “Income (loss) before income taxes.”

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Year 2009 2010 2011 2012 Accounting Income (Loss) $120,000 90,000 (80,000) (40,000) Tax Rate 40% 40% 45% 45%