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Novak Inc. reports the following pretax income (loss) for both financial reporting purposes and tax purposes. Year Tax Rate 2018 17 % Pretax Income (Loss)
Novak Inc. reports the following pretax income (loss) for both financial reporting purposes and tax purposes. Year Tax Rate 2018 17 % Pretax Income (Loss) $117,000 113,000 (250,000) 316,000 2019 17 % 2020 19 % 2021 19 % The tax rates listed were all enacted by the beginning of 2018. Prepare the journal entries for the years 2018-2021 to record income tax expense (benefit) and income taxes payable (refundable) and the tax effects of the loss carryforward, assuming that at the end of 2020 the benefits of the loss carryforward are judged more likely than not to be realized in the future. (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 O for the amounts.) Date Account Titles and Explanation Debit Credit 2018 Income Tax Expense 19,890 Income Tax Payable 19,890 2019 Income Tax Expense 19,210 Income Tax Payable 19,210 2020 Deferred Tax Asset 47,500 Income Tax Expense 47,500 2021 Income Tax Expense 60,040 Deferred Tax Asset 47,500 Income Tax Payable 12,540 Assuming that at the end of 2020 the benefits of the loss carryforward are judged more likely than not to be realized in the future, prepare the income tax section of the 2020 income statement, beginning with the line "Operating loss before income taxes. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Novak Inc. Income Statement (Partial) Save for Later Attempts: 0 of 3 used Submit
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