Exercise 16-22 Net operating loss carryback and carryforward [LO16-7] Wynn Sheet

Question

Exercise 16-22 Net operating loss carryback and carryforward [LO16-7] Wynn Sheet Metal reported a net operating loss of $160,000 for financial reporting and tax purposes in 2018. The enacted tax rate is 40% Taxable income, tax rates, and income taxes paid in Wynn's first four years of operation were as follows: Income Taxes Paid $18,000 21,008 32,008 27,80a Taxable Tax Incone Rates 2014 $60,000 30% 2815 2816 2017 70,890 3 60,8ee 45 Required: 1. Complete the following table given below and prepare the journal entry to recognize the income tax benefit of the net operating loss. Wynn elects the carryback option. 2. Show the lower portion of the 2018 income statement that reports the income tax benefit of the net operating loss. Complete this question by entering your answers in the tabs below. CalculationRequired 1 G Required 2 Complete the following table given below to record income taxes. (Enter your answers in thousands. Leave no cell blank, enter o" wherever applicable.) Rate Carried back 2014 Carried back 2015 Carried back 2016 Carrled back 2017 Total carryback 30%) 40%) 45%) Carried forward Required 1 Calculation Required 1 GJ

Explanation / Answer

Solution 1:

Solution 2:

Net Operating loss carryback Amount Rate of Tax Tax Recorded as Carried back - 2014 $0.00 30% $0.00 Carried back - 2015 $0.00 30% $0.00 Carried back - 2016 $80,000.00 40% $32,000.00 Carried back - 2017 $60,000.00 45% $27,000.00 Total Carryback $140,000.00 $59,000.00 Income tax benefit Net Operating loss Carryforward Carried forward $20,000.00 40% $8,000.00 Deferred Tax Asset

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