Question
Windsor Inc. reports the following pretax income (loss) for both financial reporting purposes and tax purposes. Year Pretax Income (Loss) Tax Rate 2018 $124,000 17
Windsor Inc. reports the following pretax income (loss) for both financial reporting purposes and tax purposes.
Year | Pretax Income (Loss) | Tax Rate | ||||
2018 | $124,000 | 17 | % | |||
2019 | 114,000 | 17 | % | |||
2020 | (216,000 | ) | 19 | % | ||
2021 | 320,000 | 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 0 for the amounts.)
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).)
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