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"2)Par lnc. reported the following pretax income (loss) and related tax rates during the years 2002-2008.
"2)Par lnc. reported the following pretax income (loss) and related tax rates during theyears 2002-2008.Pretax income (loss) Tax Rate2002 $40,000 30%2003 25,000 30%2004 60,000 30%2005 80,000 40%2006 (200,000) 40%2007 70,000 40%2008 90,000 35%Pretax financial income (loss) and taxable income (loss) were the same for all yearssince Par began business. The tax rates from 2005-2008 were enacted in 2005.a) Prepare the journal entries for years 2006-2008 to record income tax payable(refundable), income tax expense (benefit), and the tax effects of the loss carryback andcarryforward. Assume that Par elects the carryback provision where possible andexpects to realize the benefits of any loss carryforward in the year that immediatelyfollows the loss year. (15 points)b) Indicate the effect the 2006 entry (ies) has on the December 31, 2006, balance sheet.(1 0 points)c) Prepare the portion of the income statement, starting with "Operating loss beforeincome taxes," for 2006. (5 points)d) Prepare the portion of the income statement, starting with "Income before incometaxes," for 2007. (1 0 points)3)Deines Corp. sponsors a defined-benefit pension plan for its employees. On January 1,201 2, the following balances related to this plan.Plan assets (market-related value) $450,000Projected benefit obligation 600,000Pension asset/liability 150,000 Cr.Prior service cost 75,000OCI - LOSS 65,000As a result of the operation of the plan during 2012, the actuary provided the followingadditional data at December 31, 2012.Service cost for 2012 $ 75,000Actual return on plan assets in 2012 45,000Amortization of prior service cost 20,000Contributions in 2012 115,000Benefits paid retirees in 2012 70,000Settlement rate 7%Expected return rate 8%Average remaining service life of active employees 10 yearsInstructions(a) Compute pension expense for Deines Corp. for the year 201 2 by preparing a pensionworksheet. (30 points)(b) Prepare the journal entry for pension expense. (1 0 points)
