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Wynn Sheet Metal reported a net operating loss of $130,000 for financial reporting and tax purposes...

Wynn Sheet Metal reported a net operating loss of $130,000 for financial reporting and tax purposes in 2018. The enacted tax rate is 30%. Taxable income, tax rates, and income taxes paid in Wynn’s first four years of operation were as follows:

Taxable
Income		 Tax
Rates		 Income Taxes Paid
2014 $ 75,000 20 % $ 15,000
2015 85,000 20 17,000
2016 95,000 30 28,500
2017 75,000 40 30,000


Required:
1. Prepare the journal entry to recognize the income tax benefit of the net operating loss. Wynn elects the carryback option.

2. Show the lower portion of the 2018 income statement that reports the income tax benefit of the net operating loss.

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