Question

Shamrock Inc. reported the following pretax income (loss) and related tax rates during the years 2013-2019. Pretax Income (loss) Tax Rate 2013 $41,000 30 % 24,200 2014 30 % 2015 48,800 30 % 2016 84,400 40 % (173,700) 2017 45 % 2018 68,800 40 % 35 % 2019 99,900 Pretax financial income (loss) and taxable income (loss) were the same for all years since Shamrock began business. The tax ratess from 2016-2019 were enacted in 2016

Answer 1

SOLUTION:

Year	Particulars	Debit	Credit
2017	Income Tax Refund Receivable	48,400
	Benefit Due to Loss Carryback		48,400
	Deferred Tax Asset	28,300
	Benefit Due to Loss Carryback		28,300
2018	Income Tax Expense	27,520
	Deferred Tax Asset		16,200
	Income Taxes Payable		11,320
2019	Income Tax Expense	34,965
	Income Taxes Payable		34,965

Operating loss before income taxes	-180,000
Income tax benefit
Benefit due to loss carryback	48,400
Benefit due to loss carryforward	28300
Net loss	-103,300

Income Statement	68,800
Income before income taxes
Income tax expense
Current	11,320
Deferred	28,300
Net income	108,420