Jennings Inc. reported the following pretax income (loss) and related tax rates during the years 2019?2022.

Pretax financial income (loss) and taxable income (loss) were the same for all years since Jennings began business. The tax rates from 2019?2022 were enacted in 2019.

Instructions

a. Prepare the journal entries for the years 2020?2022 to record income taxes payable (refundable), income tax expense (benefit), and the tax effects of the loss carryforward. Assume that Jennings expects to realize the benefits of any loss carryforward in the year that immediately follows the loss year.

b. Indicate the effect the 2020 entry(ies) has on the December 31, 2020, balance sheet.

c. Prepare the portion of the income statement, starting with ?Operating loss before income taxes,? for 2020.

d. Prepare the portion of the income statement, starting with ?Income before income taxes,? for 2021.

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Pretax Income (Loss) Tax Rate 2019 2020 2021 2022 40% 80,000 (180,000) 40% 20% 200,000 20% 100,000