SHAOW CALCUALTIONS E19-9B (Carryback and Carryforward of NOL, No Valuation Accou

Question

SHAOW CALCUALTIONS

E19-9B (Carryback and Carryforward of NOL, No Valuation Account, No Temporary Differences) The

pretax financial income (or loss) figures for Metals, Inc. are as follows.

2011 $ 90,000

2012 65,000

2013 40,000

2014 (230,000)

2015 70,000

2016 (50,000)

2017 80,000

Pretax financial income (or loss) and taxable income (loss) were the same for all years involved. Assume

a 40% tax rate for 2011 and 2012 and a 35% tax rate for the remaining years.

Instructions   SHOW CALCULATIONS

Prepare the journal entries for the years 2014 to 2017 to record income tax expense and the effects of the

net operating loss carrybacks and carryforwards assuming Metals, Inc. uses the carryback provision. All

income and losses relate to normal operations. (In recording the benefits of a loss carryforward, assume

that no valuation account is deemed necessary.)

Explanation / Answer

Year Description Debit Credit 2014 Income Tax Refund Receivables $80,500       Benefit due to loss carryback $80,500 2015 Income Tax Expenses $24,500       Deferred Tax Assets $24,500 2016 Income Tax Refund Receivables $17,500       Benefit due to loss carryback $17,500 2017 Income Tax Expenses $28,000       Deferred Tax Assets $28,000

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