The Hunter Company purchased a light truck on January 2, 2007 for $18,000. The truck, which will be used for deliveries, has the following characteristics:

Estimated life: 5 years

Estimated residual value: $3,000

Depreciation for financial statements: straight-line

Depreciation for income tax purposes: MACRS (three-year-life)

From 2007 through 2011, each year, the company had sales of $100,000, cost of goods sold of $60,000, and operating expenses (excluding depreciation) of $15,000. The truck was disposed of on December 31, 2011 for $2,000.

Required

1. Prepare an income statement for financial reporting through pretax accounting income for each of the five years, 2007 through 2011.

2. Prepare, instead, an income statement for income tax purposes through taxable income for each of the five years, 2007 through 2011.

3. Compare the total income for all five years under Requirement 1 and Requirement 2.