P19.5 (LO.3) Groupwork (Recognition of NOL) Jennings plc reported the following pretax income (loss) and related tax rates during the years 2021-2024. 2021 2022 2023 2024 Pretax Income (loss) Tax Rate 80,000 40% (180,000) 45% 200,000 40% 100,000 40% Pretax financial income (loss) and taxable income (loss) were the same for all years since Jennings began business. The tax rates from 2021-2024 were enacted in 2021. Instructions a. Prepare the journal entries for the years 2022-2024 to record income taxes payable (refundable), income tax expense (benefit), and the tax effects of the loss carryforward. Assume that it is probable that it will realize the benefits of any loss carryforward in the year that immediately follows the loss year. b. Indicate the effect the 2022 entry or entries has on the December 31, 2022, statement of financial position. c. Prepare the portion of the income statement starting with "Operating loss before income taxes" for 2022. d. Prepare the portion of the income statement starting with "Income before income taxes" for 2023.

P19.5 (LO.3) Groupwork (Recognition of NOL) Jennings plc reported the following pretax income (loss) and related tax rates during the years 2021-2024. 2021 2022 2023 2024 Pretax Income (loss) Tax Rate 80,000 40% (180,000) 45% 200,000 40% 100,000 40% Pretax financial income (loss) and taxable income (loss) were the same for all years since Jennings began business. The tax rates from 2021-2024 were enacted in 2021. Instructions a. Prepare the journal entries for the years 2022-2024 to record income taxes payable (refundable), income tax expense (benefit), and the tax effects of the loss carryforward. Assume that it is probable that it will realize the benefits of any loss carryforward in the year that immediately follows the loss year. b. Indicate the effect the 2022 entry or entries has on the December 31, 2022, statement of financial position. c. Prepare the portion of the income statement starting with "Operating loss before income taxes" for 2022. d. Prepare the portion of the income statement starting with "Income before income taxes" for 2023.

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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Monty Corporation has pretax financial income (or loss) equal to taxable income (or loss) from 2015 through 2021 as follows. 2015 2016 2017 2018 2019 2020 2021 Income (Loss) Tax Rate N $(86,000) (97,000) 75,000 62,000 (136,000) 95,000 165,000 25 % 20 % 20 % 20 % 20 % 25 % 25 % Pretax financial income (loss) and taxable income (loss) were the same for all years since Monty has been in business. Tax rates were not enacted until the year of change. In recording the benefits of a loss carryforward, assume that it is more likely than not that the related benefits will be realized.
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Kk.74.