Question

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

2015		$144,000
2016		242,000
2017		78,000
2018		(144,000	)
2019		(377,000	)
2020		115,000
2021		106,000

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.)

Account Titles and Explanation	Debit	Credit
2017
enter an account title to record carryback	enter a debit amount	enter a credit amount
enter an account title to record carryback	enter a debit amount	enter a credit amount
2018
enter an account title to record carryforward	enter a debit amount	enter a credit amount
enter an account title to record carryforward	enter a debit amount	enter a credit amount
2019
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount
2020
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount
2021
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a credit amount	enter a debit amount

Answer 1

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Naming convention is not available, can be slightly differnet per question requirement: Solution: Journal entries Credit Date 2017 Debit $ 15,600 $ 15,600 $ 28,800 $ 28,800 $ 75,400 Account title and explaination Income Tax Expense (78000*20%) Income Tax Payable (To record the income tax expense for 2017) Deferred Income Tax Assets (144000*20%) Income Tax Expense (To record the income tax benefit for 2018) Deferred Income Tax Assets (377000*20%) Income Tax Expense (To record the income tax benefit for 2019) Income Tax Expense (115000*20%) Deferred Income tax Assets (To record the Income tax expense for 2020) Income Tax Expense (106000*20%) Deferred Income tax Assets (To record the Income tax expense for 2021) $ 75,400 $ 23,000 $ 23,000 2021 $ 21,200 $ 21,200