Question

Exercise 19-21 The pretax financial income (or loss) figures for Blossom Company are as follows. 2012 2013 2014 2015 2016 2017 2018 $155,000 226,000 74,000 (155,000) (364,000) 113,000 99,000 Pretax financial income (or loss) and taxable income (loss) were the same for all years involved. Assume a 45% tax rate for 2012 and 2013 and a 40% tax rate for the remaining years. Prepare the journal entries for the years 2014 to 2018 to record income tax expense and the effects of the net operating loss carrybacks and carryforwards assuming Blossom Company uses the carryback provision. 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 o for the amounts.)

Answer 1

Ans Date Porticulous Debit Credit 2014 Income tax expense (7400 x 40%) $29,600 $29.60 Income tax payable Ale to record the income tax expense) $ 69750 2015 Income Tax Refund Receivable To (15500x450) Benefit Que te loss Carory back $ 69750

2016 $29,600 Income Tax Return Receivable TO (4400 40%) Beneft que te loss carry back (to decood carry back) $29,600 oefersed Tax Asset (364000 - 74000 140% 116000 Benefit (To one to loss carryfoward Decond carryfrowboru) $ 11.600 . Income Tax Expense Deferoed Tax Asset $ 45200 $ 4520 2018 Income Tax Expense [99000 x 407 befessed Tax Asset Ale $39600 $39,600