Tobac Company reported an operating loss of $122,000 for financial reporting and

Question

Tobac Company reported an operating loss of $122,000 for financial reporting and tax purposes in 2016. The enacted tax rate is 40% for 2016 and all future years. Assume that Tobac elects a loss carryback. No valuation allowance is needed for any deferred tax assets. Taxable income, tax rates, and income taxes paid in Tobac's first four years of operations were as follows:

Prepare a compound journal entry to record Tobac’s tax provision for the year 2016. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

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Tobac Company reported an operating loss of $122,000 for financial reporting and tax purposes in 2016. The enacted tax rate is 40% for 2016 and all future years. Assume that Tobac elects a loss carryback. No valuation allowance is needed for any deferred tax assets. Taxable income, tax rates, and income taxes paid in Tobac's first four years of operations were as follows:

Explanation / Answer

1 Receivable income tax refund 23200 =11200+12000 Deferred tax asset 24000 =(122000-32000-30000)*40%             Income tax benefit operating loss 47200 2 Net loss for 2016 = 122000-47200= 74800

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