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Novak Inc. reports the following pretax income (loss) for both book and tax purposes. Pretax Year Income (Loss) Tax Rate 2018 $123,000 20% 2019 98,000
Novak Inc. reports the following pretax income (loss) for both book and tax purposes. Pretax Year Income (Loss) Tax Rate 2018 $123,000 20% 2019 98,000 20 % 2020 (105,000) 25 % 2021 110,000 25 % The tax rates listed were all enacted by the beginning of 2018. Date Account Titles and Explanation Debit Credit 2018 Income Tax Expense 24600 Income Tax Payable 24600 2019 Income Tax Expense 19600 Income Tax Payable 19600 2020 Income Tax Refund Receivable 44200 Deferred Tax Asset 29000 (To record income taxes.) Allowance to Reduce Deferred Tax Asset to Expected Realiz 44200 Benefit Due to Loss Carryforward 29000 (To record allowance.) 2021 Income Tax Expense 27500 Income Tax Payable 10800 Deferred Tax Asset 16700 (To record income taxes.) Allowance to Reduce Deferred Tax Asset to Expected Realiz 8350 Benefit Due to Loss Carryback 8350 (To adjust allowance.)
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