During 2024, its first year of operations, Baginski Steel Corporation reported a net operating loss of $360,000 for financial reporting and tax purposes. During 2025, Baginski reported income of $200,000 for financial reporting and tax purposes. The enacted tax rate is 25%.Required:Prepare the journal entry to recognize Baginski’s 2025 tax expense or tax benefit.Show the lower portion of the 2025 income statement that reports income tax expense or benefit. Required 1Required 2Show the lower portion of the 2025 income statement that reports income tax expense or benefit. Journal entry worksheet1Record 2024 income tax benefit from operating loss.Note: Enter debits before credits.Event1General JournalDebitCredit

Required 1 Required 2 Show the lower portion of the 2025 income statement that reports income tax expense or benefit. Journal entry worksheet 1 Record 2024 income tax benefit from operating loss. Note: Enter debits before credits. Event 1 General Journal Debit Credit

Required 1 Required 2 Show the lower portion of the 2025 income statement that reports income tax expense or benefit. Journal entry worksheet 1 Record 2024 income tax benefit from operating loss. Note: Enter debits before credits. Event 1 General Journal Debit Credit

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter3: Taxes On The Financial Statements

Section: Chapter Questions

Problem 29P

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Question

During 2024, its first year of operations, Baginski Steel Corporation reported a net operating loss of $360,000 for financial reporting and tax purposes. During 2025, Baginski reported income of $200,000 for financial reporting and tax purposes. The enacted tax rate is 25%.

Required:

Prepare the journal entry to recognize Baginski’s 2025 tax expense or tax benefit.
Show the lower portion of the 2025 income statement that reports income tax expense or benefit.

Journal entry worksheet
1
Record 2024 income tax benefit from operating loss.
Note: Enter debits before credits.
Event
1
General Journal
Debit
Credit

Definition Definition Method of recording financial transactions in the book of original entry by debiting and crediting the accounts affected by a transaction using the golden rules of accrual accounting.

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