Wynn Farms reported a net operating loss of $128,000 for financial reporting and tax purposes in 2021. The enacted tax rate is 25%. Taxable income, tax rates, and income taxes paid in Wynn's first four years of operation were as follows: Taxable Tax Income Taxes Income Rates Paid 2017 $ 67,000 20 % $ 13,400 2018 77,000 20 15,400 2019 108,000 25 27,000 2020 67,000 40 26,800 Required: 1. Prepare the journal entry to recognize the income tax benefit of the net operating loss. NOL carrybacks are not allowed for most companies, except for property and casualty insurance companies as well as some farm-related businesses. Assume Wynn is one of those businesses. 2. Show the lower portion of the 2021 income statement that reports the income tax benefit of the net operating loss. Prepare the journal entry to recognize the income tax benefit of the net operating loss. NOL carrybacks are not allowed for most companies, except for property and casualty insurance companies as well as some farm-related businesses. Assume Wynn is one of those businesses. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.)
Wynn Farms reported a net operating loss of $128,000 for financial reporting and tax purposes in 2021. The enacted tax rate is 25%. Taxable income, tax rates, and income taxes paid in Wynn's first four years of operation were as follows: Taxable Tax Income Taxes Income Rates Paid 2017 $ 67,000 20 % $ 13,400 2018 77,000 20 15,400 2019 108,000 25 27,000 2020 67,000 40 26,800 Required: 1. Prepare the journal entry to recognize the income tax benefit of the net operating loss. NOL carrybacks are not allowed for most companies, except for property and casualty insurance companies as well as some farm-related businesses. Assume Wynn is one of those businesses. 2. Show the lower portion of the 2021 income statement that reports the income tax benefit of the net operating loss. Prepare the journal entry to recognize the income tax benefit of the net operating loss. NOL carrybacks are not allowed for most companies, except for property and casualty insurance companies as well as some farm-related businesses. Assume Wynn is one of those businesses. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.)
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter18: Accounting For Income Taxes
Section: Chapter Questions
Problem 9MC: Brooks Company reported a prior period adjustment of 512,000 in pretax financial "income" and...
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Transcribed Image Text:Wynn Farms reported a net operating loss of $128,000 for financial reporting
and tax purposes in 2021. The enacted tax rate is 25%. Taxable income, tax
rates, and income taxes paid in Wynn's first four years of operation were as
follows:
Taxable
Tax
Income
Income
Rates
Taxes
Paid
2017 $
67,000
20 %
$ 13,400
2018
77,000
20
15,400
2019
108,000
25
27,000
2020
67,000
40
26,800
Required:
1. Prepare the journal entry to recognize the income tax benefit of the net
operating loss. NOL carrybacks are not allowed for most companies, except for
property and casualty insurance companies as well as some farm-related
businesses. Assume Wynn is one of those businesses.
2. Show the lower portion of the 2021 income statement that reports the
income tax benefit of the net operating loss.
Prepare the journal entry to recognize the income tax benefit of the net
operating loss. NOL carrybacks are not allowed for most companies, except for
property and casualty insurance companies as well as some farm-related
businesses. Assume Wynn is one of those businesses. (If no entry is required for
a transaction/event, select "No journal entry required" in the first account field.
Enter your answers in whole dollars.)
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