Question 8

Rode Inc. incurred a net operating loss of $567,700 in 2014. Combined income for 2012 and 2013 was $397,900. The tax rate for all years is 40%. Rode elects the carryback option. Prepare the journal entries to record the benefits of the loss carryback and the loss carryforward. Rode expects to return to profitability in 2015. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)