Question
Jennings Inc. reported the following pretax income (loss) and related tax rates during the years 2019–2022....
Jennings Inc. reported the following pretax income (loss) and related tax rates during the years 2019–2022.
Year Pretax Income (Loss) Tax Rate
2019 80,000 40%
2020 (180,000) 40%
2021 70,000 20%
2022 100,000 20%
Pretax financial income (loss) and taxable income (loss) were the same for all years since Jennings began business. The tax rates from 2019–2022 were enacted in 2019.
Instructions: (a) Prepare the journal entries for the years 2020–2022 to record income taxes payable (refundable), income tax expense (benefit), and the tax effects of the loss carryback and carryforward. Assume that Jennings elects the carryback provision where possible and expects to realize the benefits of any loss carryforward in the year that immediately follows the loss year.
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Jennings Inc. reported the following pretax income (loss) and related tax rates during the years 2019–2022....
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