Make journal entries for 2018, 2019, and 2020 related to income taxes. Assume that C.J. provides a valuation allowance for any carryforward because the company expects that only 15% of the carryforward will be realized. Provide supporting calculations (except for taxes payable to or refund available from the IRS) following each journal entry.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Q1. Taxable income and applicable tax rates for C.J. Company’s first four years are shown below. For each year, taxable income and pretax financial income are identical. In the table below, taxable income is before any consideration of NOL carryback and carryforward. The enacted tax rates were known at 1/1/2018.

                                                            Taxable

              Income         Enacted tax rate

2018       $200                     20%

2019       ($300)                    15%

2020       $340                     25%

2021       $210                     25%

  1. Now assume that C.J. opted to carryback its 2019 NOL and carryforward any unused NOL to future years. Complete the table below for 2018 through 2021 to show the amount of income tax payable to the IRS or the refund due from the IRS for each year. Put your answer in the table below. Show tax payable as a positive number and tax refund as a negative number.

                       

Year             Tax payable      Calculations                                                                      .  

2018                0                     

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2020                                       

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2021                                                                                 

      -------------------------------------------------------------------------------------------------------

 

  1. Make journal entries for 2018, 2019, and 2020 related to income taxes. Assume that C.J. provides a valuation allowance for any carryforward because the company expects that only 15% of the carryforward will be realized. Provide supporting calculations (except for taxes payable to or refund available from the IRS) following each journal entry.

 

2018

 

 

 

 

 

2019   

 

 

 

 

 

 

 

2020   

 

 

 

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