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Recording and Reporting Multiple Temporary Differences Cross Corporation provided the following reconciliation between taxable income and pretax GAAP income. Year 1 Year 2 Year 3 Year 4 $119,000 $159,000 $168,800 $149,200 1,200 800 1,000 1,000 30,000 (10,000) (10,000) (10,000) (40,000) (20,000) (36,000) 50,000 $110,000 $130,000 $124,000 $190,000 Taxable income Interest revenue on tax-exempt municipal bonds Depreciation expense Bad debt expense Pretax GAAP income Depreciation adjustment results from a difference between the GAAP basis and tax basis of depreciable equipment. Bad debt expense adjustment results from a difference between the GAAP basis and tax basis of net accounts receivable. Deferred tax accounts have a zero balance at the start of Year 1. Tax rate is 25%. Required Journal Entries Financial Statement Presentation a. Record the income tax journal entry on December 31 of Year 1. b. Record the income tax journal ent on December 31 of Year 2. c. Record the income tax journal entry on December 31 of Year 3. d. Record the income tax journal entry on December 31 of Year 4. Note: If a line in a journal entry isn't required for the transaction solact "N/A" as the

c. Record the income tax journal entry on December 31 of Year 3. d. Record the income tax journal entry on December 31 of Year 4. - Note: If a line in a journal entry isn't required for the transaction, select "N/A" as the account names and leave the Dr. and Cr. answers blank (2. Recording and Reporting Multiple Temporary Differences Cross Corporation provided the following reconciliation between taxable income and pretax GAAP income. - Depreciation adjustment results from a difference between the GAAP basis and tax basis of depreciable equipment. - Bad debt expense adjustment results from a difference between the GAAP basis and tax basis of net accounts receivable. - Deferred tax accounts have a zero balance at the start of Year 1. Tax rate is 25%. Required a. Record the income tax journal entry on December 31 of Year 1. b. Record the income tax journal entry on December 31 of Year 2. c. Record the income tax journal entry on December 31 of Year 3. d. Record the income tax journal entry on December 31 of Year 4. e. Prepare the income tax section of the income statement for Year 1 and provide the disclosure of current and deferred tax expense: - Note: Do not use negative signs with your answers. f. Indicate the deferred income tax that would be recognized on the balance sheet at December 31 of Year 1

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