Topper Company reported the following pretax financial income (loss) for the years 2014 through 2017. 2014...

Topper Company reported the following pretax financial income (loss) for the years 2014 through 2017.

2014 $ 75,000

2015 $ 47,000

2016 $(225,000)

2017 $ 89,000

Pretax financial income (loss) and taxable income (loss) were the same for all years involved. The enacted tax rate was 25% for all years. Assume the governing laws allowed for a two-year carryback and 20-year carryforward and that the carryback provision is used.

a) Prepare the journal entries for 2015, 2016, and 2017. Show all calculations.

b) Indicate the amount that will be reported as net income or net loss on the income statement for the year ended December 31, 2017.

c) The company started having financial trouble late in 2017, and determined that it was more likely than not that only 20% of the benefit of any deferred tax asset would be realized. Prepare the relevant adjusting entry based on any 12/31/17 deferred tax asset.

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