During Year 4, Lamb Inc. suffered a tax loss of $(200,000). Lamb qualifies for a two-year loss carryback option for tax purposes, using the earliest year first and with no income restrictions. Taxable income for the last three years (listed in chronological order) follows: Year 1: $180,000; Year 2: $160,000; and Year 3: $60,000. The tax rate is 40% for Year 3 and Year 4, and 25% for Year 1 and Year 2. Prepare Lamb's entry for the loss carryback on December 31 of Year 4. Date Account Name Dec. 31, Year 4 Income Tax Refund Receivable Income Tax Expense To record net operating loss carryback # # Dr. 116,000 0 Cr. 0x 116,000 x

During Year 4, Lamb Inc. suffered a tax loss of $(200,000). Lamb qualifies for a two-year loss carryback option for tax purposes, using the earliest year first and with no income restrictions. Taxable income for the last three years (listed in chronological order) follows: Year 1: $180,000; Year 2: $160,000; and Year 3: $60,000. The tax rate is 40% for Year 3 and Year 4, and 25% for Year 1 and Year 2. Prepare Lamb's entry for the loss carryback on December 31 of Year 4. Date Account Name Dec. 31, Year 4 Income Tax Refund Receivable Income Tax Expense To record net operating loss carryback # # Dr. 116,000 0 Cr. 0x 116,000 x

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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At the end of the prior year, Doubtful Inc. had a deferred tax asset of $20 million attributable to its only timing difference, a temporary difference of $80 million in a liability for estimated expenses. At that time, a valuation allowance of $4 million was established. At the end of the current year, the temporary difference is $45 million and Doubtful determines that the balance in the valuation account should now be $5 million. Taxable income is $15 million and the tax rate is 25% for all years. Required: Prepare journal entries to record Doubtful's income tax expense for the current year. Show well-labeled supporting computations for the income tax payable, the valuation allowance, and the change in the deferred tax asset account.
Lillian Farms reported a net operating loss of $240,000 for financial reporting and tax purposes in 2019. The enacted tax rate is 25 %. Taxable income, tax rates, and income taxes paid in Lillian's first two years of operation were as follows: 2017...$100,000...40% 2018...$60,000...25% Assume NOL is allowed to carryback for two years, the amount of net loss reported on the income statement for the year ended December 31, 2019 would be: a) $ (180,000). b) $(175,000). c) 9(165,000). d) $(155,000).
Bulldog Corporation reported taxable income of $510,000 this year, before any deduction for any payment to its sole shareholder and employee, Georgia Brown. Bulldog chose to pay a bonus of $146,000 to Georgia at year-end. The bonus meets the requirements to be "reasonable" and is therefore deductible by Bulldog. Georgia is subject to a marginal tax rate of 35 percent on the bonus. What is the income tax imposed on the corporate income earned by Bulldog and the income tax on the bonus paid to Georgia? Corporate tax Shareholder tax Total income tax
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For its first year of operations, Tringali Corporation's reconciliation of pretax accounting income to taxable income is as follows: Pretax accounting income $ 280,000 Permanent difference (15,600 ) 264,400 Temporary difference-depreciation (20,900 ) Taxable income $ 243,500 Tringali's tax rate is 25%. Assume that no estimated taxes have been paid. What should Tringali report as its deferred income tax liability as of the end of its first year of operations?
Recording Net Operating Loss Carryback During Year 4, Lamb Inc. suffered a tax loss of $(360,000). Lamb qualifies for a two-year loss carryback option for tax purposes, using the earliest year first and with no income restrictions. Taxable income for the last three years (listed in chronological order) follows: Year 1: $324,000; Year 2: $288,000; and Year 3: $108,000. The tax rate is 40% for Year 3 and Year 4, and 25% for Year 1 and Year 2. Prepare Lamb's entry for the loss carryback on December 31 of Year 4. Date Account Name Dec. 31, Year 4 Income Tax Refund Receivable Income Tax Expense To record net operating loss carryback Dr. Cr. 196,200 0 x 0 196,200 ×
Liston, Incorporated had taxable income of $1 million for the current year. Compute Liston’s regular tax liability.
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