Question

Question 3 View Policies Current Attempt In Progress Metlock Inc. reports the following pretax income (loss) for both book and tax purposes. 20% Pretax Year Income (Loss Tax Rate 2018 $118,000 2019 98,000 20% 2020 (299,000) 25 % 2021 117,000 25 % The tax rates listed were all enacted by the beginning of 2018. Prepare the journal entries for years 2018-2021 to record income tax expense (benefit) and income taxes payable (refundable), and the tax effects of the loss carryforward, assuming that based on the weight of available evidence. It is more likely than not that one-half of the benefits of the loss carryforward will not be realized. (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 for the amounts.) Debit Credit Date Account Titles and Explanation 2018 2019 2020

Answer 1

Journal Entries- Metloc Inc Particulars Year Debit Credit Pretax Income(loss) Year Tax rate Тах 20 % 23,600 2018 Income tax expense 23,600 2018 118,000 Carry back in 2020 Income tax payable 2019 98,000 23,600 20% 19,600 (74,750) 2020 (299,000) 25% 29,250 2019 Income tax expense 19,600 2021 117,000 25% 19,600 Income tax payable Receivables Income Tax Refund 2020 43,200 Income tax benefit Net Operating Loss 43,200 To record refund Deferred tax asset (299,000-118,000-98,000 ).25 20,750 Benefit due to loss carried forward 20,750 To record carry forward loss Benefit due to loss carry forvward (20,750/2 ) 10,375 Allowance to reduce deferred tax asset 10,375 To record carry allowance Income tax expense (109,800 20 % ) 2021 29,250 Deferred tax assets 20,750 Income tax payable 8,500 Allowance to reduce deferred tax asset 2021 10,375 Benefit due to loss carry forward 10,375 To reversal of allowance Income Statement Metloc Inc For the year ended 2020 Particulars Amount Operating Income (loss) before income tax Income tax benefit Net operating loss (299,000) 43,200 Income tax benefit Deferred Tax Assets 20,750 Net Operating Income (Loss) (235,050) Income Statement Metloc Inc For the year ended 2021 Particulars Amount Operating Income (loss) before income tax 117,000 Current year tax 8,500 Income tax benefit Deferred Tax Assets Net Operating Income (Loss) 20,750 87,750