Exercise 16-22 Net operating loss carryback and carryforward [LO16-7]

Wynn Sheet Metal reported an operating loss of $182,000 for financial reporting and tax purposes in 2016. The enacted tax rate is 40%. Taxable income, tax rates, and income taxes paid in Wynns first four years of operation were as follows:

	Taxable Income		Tax Rates		Income Taxes Paid
2012	$	71,000	30	%	$	21,300
2013		81,000	30			24,300
2014		91,000	40			36,400
2015		71,000	45			31,950

Required:

1.	Complete the following table given below and prepare the journal entry to recognize the income tax benefit of the operating loss. Wynn elects the carryback option.

Tax $ Operating loss carryback Carried back - 2012 Carried back - 2013 Carried back - 2014 Carried back - 2015 Total carryback Rate % Recorded as: 0 0 0 0 Operating loss carryforward Carried forward