In 2021, its first year of operations, Cullumber Corp. has a $830,000 net operating loss when the tax rate is 30%. In 2022, Cullumber has $380,000 taxable income and the tax rate remains 30%. Assume the management of Cullumber 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 2022 operations are known)

What are the entries in 2021 to record the tax effects of the loss carryforward?

Account Titles and Explanation

Debit

Credit

(To recognize benefit of loss carryforward)

(To record allowance amount)

What entries would be made in 2022 to record the current and deferred income taxes and to recognize the loss carryforward? (Assume that at the end of 2022 it is more likely than not that the deferred tax asset will be realized.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation	Debit	Credit
(To record current and deferred income taxes)
(To eliminate allowance and recognize loss carryforward)