Wynn Farms reported a net operating loss of $180,000 for financial reporting and tax purposes in 2021. The enacted tax rate is 25%. Taxable income, tax rates, and income taxes paid in Wynn's first four years of operation were as follows: 2017 2018 Taxable Tax Income Rates $ 80,000 20% 90,000 20 Income Taxes Paid $16,000 18,000 2019 160,000 25 2020 80,000 35 40,000 28,000 Required: 1. Prepare the journal entry to recognize the income tax benefit of the net operating loss. NOL carrybacks are not allowed for most companies, except for property and casualty insurance companies as well as some farm-related businesses. Assume Wynn is one of those businesses. 2. Show the lower portion of the 2021 income statement that reports the income tax benefit of the net operating loss. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare the journal entry to recognize the income tax benefit of the net operating loss. NOL carrybacks are not allowed for most companies, except for property and casualty insurance companies as well as some farm-related businesses. Assume Wynn is one of those businesses. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.) Show less▲
Wynn Farms reported a net operating loss of $180,000 for financial reporting and tax purposes in 2021. The enacted tax rate is 25%. Taxable income, tax rates, and income taxes paid in Wynn's first four years of operation were as follows: 2017 2018 Taxable Tax Income Rates $ 80,000 20% 90,000 20 Income Taxes Paid $16,000 18,000 2019 160,000 25 2020 80,000 35 40,000 28,000 Required: 1. Prepare the journal entry to recognize the income tax benefit of the net operating loss. NOL carrybacks are not allowed for most companies, except for property and casualty insurance companies as well as some farm-related businesses. Assume Wynn is one of those businesses. 2. Show the lower portion of the 2021 income statement that reports the income tax benefit of the net operating loss. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare the journal entry to recognize the income tax benefit of the net operating loss. NOL carrybacks are not allowed for most companies, except for property and casualty insurance companies as well as some farm-related businesses. Assume Wynn is one of those businesses. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.) Show less▲
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter18: Accounting For Income Taxes
Section: Chapter Questions
Problem 9MC: Brooks Company reported a prior period adjustment of 512,000 in pretax financial "income" and...
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Question
Transcribed Image Text:Wynn Farms reported a net operating loss of $180,000 for financial reporting and tax purposes in 2021. The enacted tax rate is 25%.
Taxable income, tax rates, and income taxes paid in Wynn's first four years of operation were as follows:
2017
2018
Taxable Tax
Income Rates
$ 80,000
20%
90,000 20
Income Taxes Paid
$16,000
18,000
2019
160,000 25
2020
80,000 35
40,000
28,000
Required:
1. Prepare the journal entry to recognize the income tax benefit of the net operating loss. NOL carrybacks are not allowed for most
companies, except for property and casualty insurance companies as well as some farm-related businesses. Assume Wynn is one of
those businesses.
2. Show the lower portion of the 2021 income statement that reports the income tax benefit of the net operating loss.
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Prepare the journal entry to recognize the income tax benefit of the net operating loss. NOL carrybacks are not allowed for most
companies, except for property and casualty insurance companies as well as some farm-related businesses. Assume Wynn is one of
those businesses. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your
answers in whole dollars.)
Show less▲
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