7.

Cabot Company reported a pretax operating loss of $50,000 for financial reporting and tax purposes in 2018. The enacted tax rate is 40% for 2018 and subsequent years. Assume that Cabot requests a refund of taxes already paid by electing a loss carryback. Taxable income, tax rates, and income taxes paid in Cabot's first four years of operations were as follows:

	Taxable income			Tax rates			Taxes paid
2014	$	30,000			30	%	$	9,000
2015	$	35,000			30	%	$	10,500
2016	$	42,000			35	%	$	14,700
2017	$	40,000			40	%	$	16,000

Required: 1. Prepare the journal entry to record Cabot's income taxes for the year 2018. (record the income taxes) 2. Compute Cabot's net loss for 2018. (Net loss____ )