Exercise 19-21 The pretax financial income (or loss) figures for Bramble Company
ID: 2538547 • Letter: E
Question
Exercise 19-21
The pretax financial income (or loss) figures for Bramble Company are as follows.
Pretax financial income (or loss) and taxable income (loss) were the same for all years involved. Assume a 45% tax rate for 2012 and 2013 and a 40% tax rate for the remaining years.
Prepare the journal entries for the years 2014 to 2018 to record income tax expense and the effects of the net operating loss carrybacks and carryforwards assuming Bramble Company 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.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Account Titles and Explanation
Debit
Credit
2014
2015
2016
(To record carryback.)
(To record carryforward.)
2017
2018
2012 $176,000 2013 243,000 2014 79,000 2015 (176,000 ) 2016 (390,000 ) 2017 118,000 2018 90,000Explanation / Answer
Date Particulars Debit Credit 2014 Income Tax Expenses 31,600 Income Tax Payable 31,600 2015 Income Tax Refund Receivable 79,200 Benefit Due To Loss Carry Back 79,200 2016 Income Tax Refund Receivable 31,600 Benefit Due To Loss Carry Back(income tax expenses) 31,600 2016 Deffered Tax Asset 1,24,400 Benefit Due To Loss Carry Forward 1,24,400 2017 Income Tax Expenses 46,400 Deffered Tax Asset 46,400 2018 Income Tax Expenses 36,000 Deffered Tax Asset 36,000
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