Prepare the income tax expense section of income statement

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Question - Whispering Winds Corporation purchased equipment very late in 2020. Based on generous capital cost allowance rates provided in the Income Tax Act, Whispering Winds Corporation claimed CCA on its 2020 tax return but did not record any depreciation because the equipment was being tested. This temporary difference will reverse and cause taxable amounts of $35,100 in 2021, $36,300 in 2022, and $44,300 in 2023. Whispering Winds's accounting income for 2020 is $249,400 and $209,400 in each of 2021 and 2022, and the tax rate is 30% for all years. There are no deferred tax accounts at the beginning of 2020.

Required -

Prepare the journal entries to record income taxes for 2021 and 2022

Prepare the income tax expense section of the income statement for 2021, beginning with the line "Income before income tax."

Prepare the income tax expense section of the income statement for 2022, beginning with the line "Income before income tax."

What trend do you notice in the amount of net income reported for 2021 and 2022 in part (d)?

Reference no: EM132870288

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