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Exercise 19-10 Income (Loss) Tax Rate ) ) Warning Don\'t show me this message ag

ID: 2461439 • Letter: E

Question

Exercise 19-10

Income (Loss)

Tax Rate

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Account Titles and Explanation

Debit

Credit

(To record carryback.)

(To record carryforward.)

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Felicia Rashad Corporation
Income Statement (Partial)
Year ended December 31, 2010

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Account Titles and Explanation

Debit

Credit

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Felicia Rashad Corporation
Income Statement (Partial)
Year ended December 31, 2011

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Account Titles and Explanation

Debit

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Felicia Rashad Corporation
Income Statement (Partial)
Year ended December 31, 2014

Exercise 19-10

Felicia Rashad Corporation has pretax financial income (or loss) equal to taxable income (or loss) from 2006 through 2014 as follows.

Income (Loss)

Tax Rate

2006 $59,450 30 % 2007 82,000 30 % 2008 34,850 35 % 2009 98,400 50 % 2010 (307,500

)

40 % 2011 184,500 40 % 2012 61,500 40 % 2013 215,250 40 % 2014 (123,000

)

45 %
Pretax financial income (loss) and taxable income (loss) were the same for all years since Rashad has been in business. Assume the carryback provision is employed for net operating losses. In recording the benefits of a loss carryforward, assume that it is more likely than not that the related benefits will be realized.

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Explanation / Answer

Debit Credit Income tax refund Receivable 103,833 Deferred Income tax asset 19,167 Refund of income tax from Loss carry back 103,833 Refund of income tax from Loss carry forward 19,167 Year Taxable income Tax Cumulative tax 2006 59,450 17,835 17,835 2007 82,000 24,600 42,435 2008 34,850 12,197 54,632 2009 98,400 49,200 103,832 2010 307,500 (123,000) (19,167)