Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Wildhorse Inc. reports the following pretax income (loss) for both financial reporting purposes and tax purposes. Year Tax Rate 2018 17 % Pretax Income (Loss)

image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed

Wildhorse Inc. reports the following pretax income (loss) for both financial reporting purposes and tax purposes. Year Tax Rate 2018 17 % Pretax Income (Loss) $112,000 97,000 (236,000) 314,000 2019 17 % 2020 19 % 2021 19 % The tax rates listed were all enacted by the beginning of 2018. Prepare the journal entries for 2020 and 2021, assuming that based on the weight of available evidence, it is more likely than not that one-fourth of the benefits of the loss carryforward will not be realized. (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 2020 Income Tax Refund Receivable 35530 Deferred Tax Asset 38989 (To record refund.) Benefit Due to Loss Carryforward 9747 Allowance to Reduce Deferred Tax Asset to Expected Rea 9747 (To record allowance.) 2021 Income Tax Expense 59660 Income Tax Payable 14820 Deferred Tax Asset 44840 (To record income taxes.) Allowance to Reduce Deferred Tax Asset to Expected Realiz 9747 Benefit Due to Loss Carryback 9747 (To adjust allowance.) 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).) Wildhorse Inc. Income Statement (Partial) For the Year Ended December 31, 2020 Operating Loss before Income Taxes $ 236000 Income Tax Benefit Dividends 74519 Net Income /(Loss) $ 161481 Assuming that based on the weight of available evidence, it is more likely than not that one-fourth of the benefits of the loss carryforward will not be realized, 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).) Wildhorse Inc. Income Statement (Partial) For the Year Ended December 31, 2020 Operating Loss before Income Taxes $ 236000 Income Tax Benefit Income Tax Expense - Loss Carryback 64772 Net Income /(Loss) $ 171228

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting The Basis For Business Decisions

Authors: Robert F. Meigs, Jan R. Williams, Susan F Haka, Mark S. Bettner

International 11th Edition

007115809X, 978-0071158091

More Books

Students also viewed these Accounting questions

Question

What is a verb?

Answered: 1 week ago