Recording NOL Carryforward and Carryback | Carryforward Toner Corporation computed the following: Year 1 taxable income, $10,000; Year 2 taxable loss, $( 40,000). At the end of Year 2, Toner made the following estimates: Year 3 taxable income, $4,000; Year 4 taxable income, $11,000; and Year 5 taxable income, $50,000. On the basis of these estimates, Toner believes the full amount of the tax loss carryforward benefit is more likely than not to be realized. There are no other temporary differences. Tax rates are 25% for Year 1, Year 2, and Year 3; and 30% for Year 4 and Year 5. Net operating loss carryforwards can only offset a maximum of 80% of taxable income in each of the future years. Required a. Provide the income tax entry for Year 2. Date Dec. 31, Year 2 Deferred Tax Asset Account Name Dr. Cr. 11,840 0 0 11,840 Income Tax Expense To record income tax expense b. Provide the income tax entry for Year 3, assuming that the actual taxable income was $6,000 (tax rate, 25%). Date Account Name Dec. 31, Year 3 Income Tax Expense Deferred Tax Asset Income Tax Payable To record income tax expense Dr. Cr. 1,580 0 0 1,280 0 300