Question

Exercise 19-21 The pretax financial income (or loss) figures for Nash Company are as follows. 2017 2018 2019 2020 2021 $ 77,000 (157,000) (404,000) 125,000 95,000 Pretax financial income (or loss) and taxable income (loss) were the same for all years involved. Assume a 25% tax rate for 2015 and 2016 and a 20% tax rate for the remaining years.

Answer 1

2017	Tax rate is 20% so the tax amount is
	$77000*20%=$15400
	Income Tax Exp. a/c
	To Bank a/c
2018	In 2018 there is a loss of $157000 so no tax is be payable
2019	In 2019 there is a loss of $404000 so no tax is be payable
2020 & 2021	In 2020 & 2021 there is a profit of $125000 & $95000 which we can adjust again the losess of 2018 & 2019 so there is no tax liability in 2020 & 2021.