Exercise 113 (Part Level Submission)

In 2018, its first year of operations, Kimble Corp. has a $920,000 net operating loss when the tax rate is 35%. In 2019, Kimble has $470,000 taxable income and the tax rate remains 35%. Assume the management of Kimble Corp. thinks that it is more likely than not that the loss carryforward will not be realized in the near future because it is a new company (this is before results of 2019 operations are known).

(a)

What are the entries in 2018 to record the tax effects of the loss carryforward? (Credit account titles are automatically indented when amount is entered. Do not indent manually.)