Prepare Baxter income tax journal entry at the end

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Problem - Operating Loss - Baxter Company began operations in 2015 and was profitable through 2018, during which time the tax rate was 30%. At the end of 2019, the tax rate was changed to 21% and, Baxter reported a pretax operating loss of $150,000 for both financial reporting and income taxes. In 2020, Baxter reported pretax operating income of $200,000.

Required -

1. Prepare Baxter's income tax journal entry at the end of 2019.

2. Prepare the lower portion of Baxter's 2019 income statement.

3. Prepare Baxter's income tax journal entry at the end of 2020.

4. Prepare the lower portion of Baxter's 2020 income statement.

Reference no: EM132891122

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