Question $2(34$ marks$)$

The accounting income of Blue Jays Corporation and its taxable income for the years $2023$ to $2026$ are as follows:

Year Accounting Taxable Tax rate

income income

$2023$ $$460,000$ $$299,00025\mathrm{.}0\%$

$2024$ $$420,000$ $$294,00030\mathrm{.}0\%$

$2025$ $$390,000$ $$304,20030\mathrm{.}0\%$

$2026$ $$460,000$ $$644,00030\mathrm{.}0\%$

The change to the tax rate from $25\%$ to $30\%$ was not enacted until early in $2024.$

Assuming income for each year includes an non$-$deductible expense of $$40,000$ that is categorized

as permanent differences for tax purposes. The remainder of the difference between accounting

income and taxable income in each period is due to one reversing difference for the depreciation of

property, plant $,$ and equipment.$$ No deferred taxes existed at the beginning of $2023.$

Instructions

a$)$ Calculate the current expense or benefit, and the amounts of the tax base for the deferred tax, for each of the four years.$$ Also calculate the balance of the deferred tax balance sheet account at the end of each fiscal year from $2023$ to $2026.(8$ marks$)$

b$)$Prepare journal entries to record income taxes in all four years. $(18$ marks$)$

c$)$With proper title, prepare the partial income statement for $2024,$ beginning with the line "Income before income tax". $(4$ marks$)$

d$)$ Calculate the effective tax rate for $2024.$ Why is it different from the statutory tax rate of $30\%.(4$marks$)$

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