In $2023,$ Calton Inc. incurs a loss of $$13,000,000$ for tax purposes when the tax rate was $29\%.$ Because the company had no prior taxable income, it carried the entire loss forward. Considering

the size of the loss, Calton management expected to recover only three$-$quarters of the loss by applying the loss to future income. In $2024,$ the income tax rate increased from $29\%$ to $32\%.$

Required

Record the $2023$ and $2024$ journal entries relating to Calton's tax loss. Use a valuation account for the unrecognized portion of losses carried forward.

Prepare the journal entries for $2023.($Record debits first, then credits. Explanations are not required. Leave any unused cell bank.$)$

Begin by preparing the entry for the loss carryforward at the end of $2023.$Question content area top

Part $1$

In $2023,$ Calton Inc. incurs a loss of $ $13$ comma $000$ comma $000$ for tax purposes when the tax rate was $29\%.$ Because the company had no prior taxable$$ income, it carried the entire loss forward. Considering the size of the$$ loss, Calton management expected to recover only$$ three$-$quarters of the loss by applying the loss to future income. In $2024,$ the income tax rate increased from $29\%$ to $32\%.$

Required

Record the $2023$ and $2024$ journal entries relating to Calton$\text{'}$s tax loss. Use a valuation account for the unrecognized portion of losses carried forward.