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On 1 January 20X7, Change Incorporated commenced business operations. At 31 December 20X9, the following...

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Accounting

On 1 January 20X7, Change Incorporated commenced business operations. At 31 December 20X9, the following information relates to Chang:

20X7 20X8 20X9
Earnings (loss) before tax $ 329,900 $ (481,100 ) $ 775,000
Tax rate (enacted in each year) 30 % 35 % 40 %
Depreciation expense (asset cost was $710,000) 61,000 61,000 61,000
Capital cost allowance 213,000 0 89,000
Dividends received (nontaxable) 40,600 65,500 65,500
Golf club dues 10,700 10,700 10,700

Required: 1. Prepare journal entries to record tax for 20X7, 20X8, and 20X9. Assume that the loss carryforward usage in 20X8 is considered to be probable.

2. Prepare journal entries to record tax for 20X7, 20X8, and 20X9. Assume that the loss carryforward usage in 20X8 is not considered to be probable but is considered to be probable in 20X9.

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