Question $5$ of $9$

Bridgeport Inc. incurred a net operating loss of $$582,000$ in $2023.$ Combined income for $2020,2021,$ and $2022$ was $$459,500.$ The tax

rate for all years is $30\%.$ Assume that it is more likely than not that the entire tax loss carryforward will not be realized in future years.

Assume that Bridgeport earns taxable income of $$20,100$ in $2024$ and that at the end of $2024$ there is still too much uncertainty to

recognize a deferred tax asset.

$($a$)$

Correct Answer $($Used$)$

Prepare the journal entries that are necessary at the end of $2024$ assuming that Bridgeport does not use a valuation allowance

account. $($List all debit entries before credit entries. Credit account titles are automatically indented when the 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.$)$

Year Account Titles and Explanation

$2024$

Current Tax Expense

Income Tax Payable

Debit

Credit

$($To record current tax expense$)$

$2024$

$($To record current tax benefit$)($b$)$

Your answer is partially correct.

Prepare the journal entries that are necessary at the end of $2024$ assuming that Bridgeport does use a valuation allowance

account. $($List all debit entries before credit entries. Credit account titles are automatically indented when the 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.$)$

Year Account Titles and Explanation

Debit

Credit

$2024$

Deferred Tax Expense

$($To record deferred tax expense$)$

$2024$

Allowance to Reduce Deferred Tax Asset to Expected Re;

$($To bring the Deferred Tax Asset account to its realizable

value$)$

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