Question

The pretax financial income (or loss) figures for Shamrock Company are as follows. 2015 $157,000 2016...

The pretax financial income (or loss) figures for Shamrock Company are as follows.

2015

$157,000

2016

233,000

2017

77,000

2018

(157,000 )

2019

(404,000 )

2020

125,000

2021

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.

Prepare the journal entries for the years 2017 to 2021 to record income tax expense and the effects of the net operating loss carryforwards. All income and losses relate to normal operations. (In recording the benefits of a loss carryforward, assume that no valuation account is deemed necessary.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Homework Answers

Answer #1

Answer :-

Journal entries for the years 2017 to 2021 to record income tax expense and the effects of the net operating loss carryforwards are as follows :-

Date Particular Debit $ Credit $
2017 Income tax expenses A/c Dr. (77,000 x 20%) $15,400
Income tax payable A/c $15,400
2018 Income tax refund Receivable A/c Dr. $39,250
To Benefit due to loss carry-back A/c $39,250
(Note -1)
2019 Income tax refund receivable A/c. Dr. $15,400
To Benefit due to loss carry-back A/c $15,400
Deferred tax assets A/c Dr. $65,400
To Benefit due to loss carry forward A/c $65,400
(Note -2)
2020 Income Tax expenses A/c Dr.(125,000 × 20%) $ 25,000
To Deferred tax assets A/c $25,000
2021 Income Tax expenses A/c Dr.(95,000 x 20%) $19,000
To Deferred tax assets A/c

$19,000

Note 1 :-

In 2018 - Net operating loss ($157,000)

Loss carryback 2016 - 157,000 × 25% tax rate of 2016 = $39,250

Note 2 :-

In 2019- Net Operating loss is ($404,000)

Loss carryback 2017 - $77,000 × 20% = $15,400

Since in 2018 there is also Net Operating loss then the remaining Net Operating loss of $327,000 ( =$404,000 - $77,000) is carryforwards to future years .

Loss carryforwards - $327,000 × 20% = $65,400

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
The pretax financial income (or loss) figures for Indigo Company are as follows. 2015 $164,000 2016...
The pretax financial income (or loss) figures for Indigo Company are as follows. 2015 $164,000 2016 275,000 2017 86,000 2018 (164,000 ) 2019 (390,000 ) 2020 113,000 2021 98,000 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. Prepare the journal entries for the years 2017 to 2021 to record income tax expense and the...
The pretax financial income (or loss) figures for Blue Company are as follows. 2015 $161,000 2016...
The pretax financial income (or loss) figures for Blue Company are as follows. 2015 $161,000 2016 248,000 2017 76,000 2018 (161,000 ) 2019 (390,000 ) 2020 119,000 2021 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. Prepare the journal entries for the years 2017 to 2021 to record income tax expense and the...
The pretax financial income (or loss) figures for Skysong Company are as follows. 2015 $144,000 2016...
The pretax financial income (or loss) figures for Skysong Company are as follows. 2015 $144,000 2016 225,000 2017 72,000 2018 (144,000 ) 2019 (342,000 ) 2020 108,000 2021 90,000 Pretax financial income (or loss) and taxable income (loss) were the same for all years involved. Assume a 45% tax rate for 2015 and 2016, and a 20% tax rate for the remaining years. Prepare the journal entries for the years 2017 to 2021 to record income tax expense and the...
Exercise 19-21 The pretax financial income (or loss) figures for Monty Company are as follows. 2017...
Exercise 19-21 The pretax financial income (or loss) figures for Monty Company are as follows. 2017 86,000 2018 (46,000 ) 2019 (41,000 ) 2020 127,000 2021 100,000 Pretax financial income (or loss) and taxable income (loss) were the same for all years involved. Assume a 25% tax rate for 2017 and a 20% tax rate for the remaining years. Prepare the journal entries for the years 2017 to 2021 to record income tax expense and the effects of the net...
Exercise 19-21 The pretax financial income (or loss) figures for Flounder Company are as follows. 2017...
Exercise 19-21 The pretax financial income (or loss) figures for Flounder Company are as follows. 2017 77,000 2018 (44,000 ) 2019 (39,000 ) 2020 131,000 2021 105,000 Pretax financial income (or loss) and taxable income (loss) were the same for all years involved. Assume a 25% tax rate for 2017 and a 20% tax rate for the remaining years. Prepare the journal entries for the years 2017 to 2021 to record income tax expense and the effects of the net...
The pretax financial income (or loss) figures for Marin Company are as follows. 2017 72,000 2018...
The pretax financial income (or loss) figures for Marin Company are as follows. 2017 72,000 2018 (37,000 ) 2019 (32,000 ) 2020 110,000 2021 93,000 Pretax financial income (or loss) and taxable income (loss) were the same for all years involved. Assume a 25% tax rate for 2017 and a 20% tax rate for the remaining years. Prepare the journal entries for the years 2017 to 2021 to record income tax expense and the effects of the net operating loss...
The pretax financial income (or loss) figures for Larkspur Company are as follows. 2017 76,000 2018...
The pretax financial income (or loss) figures for Larkspur Company are as follows. 2017 76,000 2018 (58,000 ) 2019 (43,000 ) 2020 130,000 2021 105,000 Pretax financial income (or loss) and taxable income (loss) were the same for all years involved. Assume a 25% tax rate for 2017 and a 20% tax rate for the remaining years. Prepare the journal entries for the years 2017 to 2021 to record income tax expense and the effects of the net operating loss...
The pretax financial income (or loss) figures for Skysong Company are as follows. 2017 86,000 2018...
The pretax financial income (or loss) figures for Skysong Company are as follows. 2017 86,000 2018 (41,000) 2019 (36,000) 2020 113,000 2021 98,000 Pretax financial income (or loss) and taxable income (loss) were the same for all years involved. Assume a 25% tax rate for 2017 and a 20% tax rate for the remaining years. Prepare the journal entries for the years 2017 to 2021 to record income tax expense and the effects of the net operating loss carryforwards. All...
Pharoah Corporation has pretax financial income (or loss) from 2015 through 2021 as follows. Income (Loss)...
Pharoah Corporation has pretax financial income (or loss) from 2015 through 2021 as follows. Income (Loss) Tax Rate 2015 $67,200 25 % 2016 (210,000 ) 20 % 2017 126,000 20 % 2018 42,000 20 % 2019 147,000 20 % 2020 (84,000 ) 25 % 2021 84,000 25 % Pretax financial income (loss) and taxable income (loss) were the same for all years since Pharoah has been in business. In recording the benefits of a loss carryforward, assume that it is...
Nash Corporation has pretax financial income (or loss) equal to taxable income (or loss) from 2009...
Nash Corporation has pretax financial income (or loss) equal to taxable income (or loss) from 2009 through 2017 as follows: Income (Loss) Tax Rate 2009 $41,180 30 % 2010 56,800 30 % 2011 24,140 35 % 2012 68,160 50 % 2013 (213,000 ) 40 % 2014 127,800 40 % 2015 42,600 40 % 2016 149,100 40 % 2017 (85,200 ) 45 % Pretax financial income (loss) and taxable income (loss) were the same for all years since Nash has been...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT