(L0 1,2) (One Temporary Difference, Tracked for 4 Years, One Permanent Difference, Change in Rate) The pretax financial income of Young Company differs from its taxable income throughout each of 4 years as follows:

Pretax financial income for each year includes a nondeductible expense of $20,000 (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. Instructions (a) Prepare journal entries to record income taxes in all 4 years. Assume that the change in the tax rate to 35% and 40% was not enacted until the beginning of 2021 and 2022, respectively. (b) Prepare the income statement for 2021, beginning with Income before income taxe s

Tax Rate 35% Year 2020 2021 2022 2023 Pretax Financial Income $400,000 240,000 370,000 300,000 Taxable Income $220,000 200,000 400,000 260,000 20% 20% 20%