Exercise 16-24 (Algo) Net operating loss carryback [LO16-7]

Wynn Farms reported a net operating loss of $160,000 for financial reporting and tax purposes in 2021. The enacted tax rate is 25%. 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
2017	$	75,000		20	%		$	15,000
2018		85,000		20				17,000
2019		140,000		25				35,000
2020		75,000		40				30,000

Required: 1. Prepare the journal entry to recognize the income tax benefit of the net operating loss. NOL carrybacks are not allowed for most companies, except for property and casualty insurance companies as well as some farm-related businesses. Assume Wynn is one of those businesses. 2. Show the lower portion of the 2021 income statement that reports the income tax benefit of the net operating loss.

Exercise 16-24 (Algo) Net operating loss carryback [LO16-7] Wynn Farms reported a net operating loss of $160,000 for financial reporting and tax purposes in 2021. The enacted tax rate is 25%. Taxable income, tax rates, and income taxes paid in Wynn's first four years of operation were as follows: Tax 2017 2018 2019 2020 Taxable Income $ 75,000 85,000 140,000 75,000 Rates 20% 20 25 40 Income Taxes Paid $ 15,000 17,000 35,000 30,000 Required: 1. Prepare the journal entry to recognize the income tax benefit of the net operating loss. NOL carrybacks are not allowed for most companies, except for property and casualty insurance companies as well as some farm-related businesses. Assume Wynn is one of those businesses. 2. Show the lower portion of the 2021 income statement that reports the income tax benefit of the net operating loss. Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare the journal entry to recognize the income tax benefit of the net operating loss. NOL carrybacks are not allowed for most companies, except for property and casualty insurance companies as well as some farm-related businesses. Assume Wynn is one of those businesses. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.) No Event General Journal Debit Credit 1 1 Receivable-Income tax refund 65,000