Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Wynn Farms reported a net operating loss of $210,000 for financial reporting and tax purposes in 2021. The enacted tax rate is 25%. Taxable income,

Wynn Farms reported a net operating loss of $210,000 for financial reporting and tax purposes in 2021. The enacted tax rate is 25%. Taxable income, tax rates, and income taxes paid in Wynns first four years of operation were as follows:

Taxable Income Tax Rates Income Taxes Paid
2017 $ 70,000 30 % $ 21,000
2018 80,000 30 24,000
2019 130,000 40 52,000
2020 40,000 45 18,000

Required: 1. NOL carrybacks are not allowed for most companies, except for property and casualty insurance companies as well as some farm-related businesses. Assume Wynn is one of those businesses. Complete the table given below and prepare the journal entry to recognize the income tax benefit of the net operating loss. 2. Show the lower portion of the 2021 income statement that reports the income tax benefit of the net operating loss.

Complete this question by entering your answers in the tabs below.

  • Required 1 Calculation
  • Required 1 GJ
  • Required 2

NOL carrybacks are not allowed for most companies, except for property and casualty insurance companies as well as some farm-related businesses. Assume Wynn is one of those businesses. Complete the following table to recognize the income tax benefit of the net operating loss. (Enter your answers in thousands (i.e., 55,000 should be entered as 55). Leave no cell blank, enter "0" wherever applicable. Enter all amounts as positive values.)

Show less

Operating loss carryback Rate % Tax $ Recorded as:
Carried back - 2017 x = $0
Carried back - 2018 x = 0
Carried back - 2019 x =
Carried back - 2020 x =
Total carryback $0.00
Operating loss carryforward
Carried forward x =

Journal entry worksheet

Show the lower portion of the 2021 income statement that reports the income tax benefit of the net operating loss. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in thousands rounded to two decimal places.(i.e., 55,550 should be entered as 55.55).)

Income tax benefit:
0.00
$0.00

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

Audit And Assurance Study Text

Authors: Get Through Guides

1st Edition

1848080255, 978-1848080256

More Books

Students also viewed these Accounting questions

Question

e. What difficulties did they encounter?

Answered: 1 week ago