Exercise 19-25

Meyer reported the following pretax financial income (loss) for the years 20122016.

2012 $243,100

2013 357,000

2014 120,000

2015 (574,000)

2016 176,900

Pretax financial income (loss) and taxable income (loss) were the same for all years involved. The enacted tax rate was 38% for 2012 and 2013, and 44% for 20142016. Assume the carryback provision is used first for net operating losses. Prepare the journal entries for the years 20142016 to record income tax expense, income taxes payable (refundable), and the tax effects of the loss carryback and loss carryforward, assuming that based on the weight of available evidence, it is more likely than not that one-fifth of the benefits of the loss carryforward will not be realized.

Date	Account Title & Explanation	Debit	Credit
2014
2015
	To Record Refund
	To Record Allowance
2016
	To Record Income Taxes
	To Adjust Allowance