Tattoo Inc. reports the following pre-tax incomes (losses) for both financial reporting purposes and tax purposes: Year

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Tattoo Inc. reports the following pre-tax incomes (losses) for
both financial reporting purposes and tax purposes: Year Accounting
Income (Loss) Tax Rate 2019 $ 110,000 25% 2020 (250,000) 27% 2021
150,000 28% The tax rates listed were all enacted by the beginning
of 2019. Parker reports under the ASPE and uses future tax method
and elects to use the carryback previsions.
Instructions
a. Assume that it is more likely than not that all carry forward
benefits will be realized. 1. Prepare the journal entries for 2019
to 2021. 2. Based on your entries in part (a), prepare the income
tax section of 2019 to 2021 income statements, beginning with the
line “Income (loss) before income tax.”
b. Notwithstanding the assumption in a), assume that at end of
2020, Tattoo assessed that the amount of loss carryforward it was
more likely than not to benefit from was $100,000. Tattoo uses
valuation allowance account. 1. Show the journal entry necessary
for 2020 and 2021 deferred taxes and 2. Prepare the revised income
tax section of 2019 to 2021 income statements, beginning with the
line “Income (loss) before income tax.”.