Jenny Corporation reported a pretax operating loss of $150,000 for financial rep

Question

Jenny Corporation reported a pretax operating loss of $150,000 for financial reporting and tax purposes in 2014. The enacted tax rate is 40% for 2014 and subsequent years. In 2012 Jenny reported taxable income of $42,000 and paid $14,700 in income taxes; and in 2013 Jenny reported taxable income of $40,000 and paid $16,000 in taxes. Asume Jenny requests a refund of taxes already paid by electing a loss carryback. In addition Jenny expects to generate positive operating profits and taxable income in the future.

The after tax net loss reported by Jenny on its year end December 31, 2014 income statement is:

A)$92,100

B)$119,300

C)$90,000

D)$150,000

Explanation / Answer

Ans) B) 119300 Note Assume Tax refunded of previous year

Year Profit /Loss Tax 2014 -150000 - 2012 42000 14700 2013 40000 16000 Total Tax paid 30700 Current Year Loss 150000 Less Total tax paid privious two year will refund 30700 Net Loss for the year 119300

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