1. What is the amount of refund that will be claimed in 20X7, taking the loss back to the oldest possible year, first? Provide the journal entry for income tax receivable in 20X7. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) 2. Is there a different pattern for claiming a refund that will maximize cash flows for the company? Recalculate the refund and provide the journal entry using this alternate pattern. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Burgher Ltd. had a taxable loss of $318,000 in 20X7. The tax rate in 20X7 is 32%. In the past three years, the company had the following taxable income and tax rates:
| 20X4 | 20X5 | 20X6 | |||||||
| Taxable income | $ | 212,000 | $ | 127,200 | $ | 84,800 | |||
| Tax rate | 36 | % | 38 | % | 40 | % | |||
There are no temporary differences other than those created by income tax losses.
1. What is the amount of refund that will be claimed in 20X7, taking the loss back to the oldest possible year, first? Provide the
2. Is there a different pattern for claiming a refund that will maximize cash flows for the company? Recalculate the refund and provide the journal entry using this alternate pattern. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
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