Wynn Farms reported a net operating loss of $285,000 for financial reporting and tax purposes in 2024. 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
2020	$ 85,000	30%	$25,500
2021	95,000	30	28,500
2022	205,000	40	82,000
2023	40,000	45	18,000

Required:

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.

Show the lower portion of the 2024 income statement that reports the income tax benefit of the net operating loss.

1

Operating loss carryback			Rate %		Tax $	Recorded as:
Carried back - 2020	$0selected answer correct	x	30%selected answer correct	=	$0
Carried back - 2021	0selected answer correct	x	30%selected answer correct	=	$0
Carried back - 2022	205,000selected answer correct	x	40%selected answer correct	=	$82,000
Carried back - 2023	80,000selected answer incorrect	x	45%selected answer correct	=	$36,000
Total carryback					$118,000	Receivable-income tax refundselected answer correct
Operating loss carryforward
Carried forward	$285,000selected answer incorrect	x	118,000%selected answer incorrect	=	$336,300,000	Deferred tax asset-ending

2

No	Transaction	General Journal	Debit	Credit
1	1	ReceivableIncome tax refundselected answer correct	118,000selected answer incorrect	not attempted
		Income tax expenseselected answer incorrect	not attempted	118,000

3

Show the lower portion of the 2024 income statement that reports the income tax benefit of the net operating loss.