The pretax financial income (or loss) figures for Jenny Spangler Company are as

Question

The pretax financial income (or loss) figures for Jenny Spangler Company are as follows. 2009 $177,500 2010 259,900 2011 88,900 2012 (177,500 ) 2013 (395,500 ) 2014 131,300 2015 113,700 Pretax financial income (or loss) and taxable income (loss) were the same for all years involved. Assume a 40% tax rate for 2009 and 2010 and a 35% tax rate for the remaining years. Prepare the journal entries for the years 2011 to 2015 to record income tax expense and the effects of the net operating loss carrybacks and carryforwards assuming Jenny Spangler 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.) Account Titles and Explanation Debit Credit 2011 Entry field with correct answer Entry field with correct answer Entry field with correct answer Entry field with correct answer Entry field with correct answer Entry field with correct answer (To record income tax expense.) 2012 Entry field with correct answer Entry field with incorrect answer Entry field with correct answer Entry field with correct answer Entry field with correct answer Entry field with incorrect answer 2013 Entry field with correct answer Entry field with incorrect answer Entry field with correct answer Entry field with correct answer Entry field with correct answer Entry field with incorrect answer (To record carryback.) Entry field with correct answer Entry field with incorrect answer Entry field with correct answer Entry field with correct answer Entry field with correct answer Entry field with incorrect answer (To record carryforward.) 2014 Entry field with incorrect answer Entry field with incorrect answer Entry field with correct answer Entry field with incorrect answer Entry field with correct answer Entry field with incorrect answer 2015 Entry field with incorrect answer Entry field with incorrect answer Entry field with correct answer Entry field with incorrect answer Entry field with correct answer Entry field with incorrect answer Click if you would like to Show Work for this question: Open Show Work

Explanation / Answer

Year Particular Debit Credit 2011 Income Tax Expense A/c. $    31,115.00 To Income tax payable A/c. $    31,115.00 (Income tax expense for the current year = $ 88,900 x 35%= $31,115 recorded for the year, recorded in the books) 2012 Income tax refund receivable A/c. $    71,000.00 To Benefit due to loss carryback A/c $    71,000.00 (Loss of year 2012 setoff against profit in the year of 2009 as per carry back provision, refund receivable = ($ 177,500 x 40%)=$ 71,000. Income tax rate in the year 2009 was 40% so same shall be taken for refund) 2013 Income tax refund receivable A/c. $ 103,960.00 Deferred Tax Asset year 2013 A/c $    47,460.00 To Benefit due to loss carryforward A/c $    47,460.00 To Benefit due to loss carryback A/c $ 103,960.00 (Loss of year 2013 setoff against profit in the year of 2010 as per carry back provision, refund receivable = ($ 259,900 x 40%)=$ 103,960. Income tax rate in the year 2010 was 40% so same shall be taken for refund) Remaining loss after setoff = ($ 395,500 - $ 259,900) $ 135,600. Deferred tax asset recorded @ 35% of $ 135,600) 2014 Income Tax Expense A/c $    45,955.00 To Deferred Tax Asset year 2013 A/c $    45,955.00 (Tax expense for the current year recorded against deferred tax asset created in the year of 2013) 2015 Income Tax Expense A/c $    39,795.00 To Deferred Tax Asset year 2013 A/c $      1,505.00 To Income tax payable A/c. $    38,290.00 (Tax expense for the current year recorded against balance deferred tax asset created in the year of 2013 and remaining amount recorded as current liablity)

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