P19.5 (LQ.3) Groupwork (Recognition of NOL) Jennings plc reported the following pretax income (loss) and related tax rates during the years 2021–2024. Pretax Income (loss) Tax Rate 2021 80,000 40% 2022 (180,000) 45% 2023 200,000 40% 2024 100,000 40% Pretax financial income (loss) and taxable income (loss) were the same for all years since Jennings began business. The tax rates from 2021–2024 were enacted in 2021. Instructions a. Prepare the journal entries for the years 2022–2024 to record income taxes payable (refundable), income tax expense (benefit), and the tax effects of the loss carryforward. Assume that it is probable that it will realize the benefits of any loss carryforward in the year that immediately follows the loss year. b. Indicate the effect the 2022 entry or entries has on the December 31, 2022, statement of financial position. c. Prepare the portion of the income statement starting with “Operating loss before income taxes" for 2022.

P19.5 (LQ.3) Groupwork (Recognition of NOL) Jennings plc reported the following pretax income (loss) and related tax rates during the years 2021–2024. Pretax Income (loss) Tax Rate 2021 80,000 40% 2022 (180,000) 45% 2023 200,000 40% 2024 100,000 40% Pretax financial income (loss) and taxable income (loss) were the same for all years since Jennings began business. The tax rates from 2021–2024 were enacted in 2021. Instructions a. Prepare the journal entries for the years 2022–2024 to record income taxes payable (refundable), income tax expense (benefit), and the tax effects of the loss carryforward. Assume that it is probable that it will realize the benefits of any loss carryforward in the year that immediately follows the loss year. b. Indicate the effect the 2022 entry or entries has on the December 31, 2022, statement of financial position. c. Prepare the portion of the income statement starting with “Operating loss before income taxes" for 2022.

SWFT Corp Partner Estates Trusts

42nd Edition

ISBN:9780357161548

Author:Raabe

Publisher:Raabe

Chapter3: Corporations: Introduction And Operating Rules

Section: Chapter Questions

Problem 34P

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