P19.5 (LQ.3) Groupwork (Recognition of NOL) Jennings plc reported the following pretax income (loss) and related tax rates during the years 2021–2024. Pretax Income (loss) Tax Rate 2021 80,000 40% 2022 (180,000) 45% 2023 200,000 40% 2024 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.
P19.5 (LQ.3) Groupwork (Recognition of NOL) Jennings plc reported the following pretax income (loss) and related tax rates during the years 2021–2024. Pretax Income (loss) Tax Rate 2021 80,000 40% 2022 (180,000) 45% 2023 200,000 40% 2024 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.
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 4BCRQ
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![P19.5 (LQ3) Groupwork (Recognition of NOL) Jennings plc reported
the following pretax income (loss) and related tax rates during the years
2021–2024.
Pretax Income (loss) Tax Rate
2021
80,000
40%
2022
(180,000)
45%
2023
200,000
40%
2024
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.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff0ebf8d2-9b4e-4b89-9717-33c2ef34e3fe%2Fe02d03d2-37cb-41fc-ba8e-ade6e688ffeb%2Fortrgg8_processed.png&w=3840&q=75)
Transcribed Image Text:P19.5 (LQ3) Groupwork (Recognition of NOL) Jennings plc reported
the following pretax income (loss) and related tax rates during the years
2021–2024.
Pretax Income (loss) Tax Rate
2021
80,000
40%
2022
(180,000)
45%
2023
200,000
40%
2024
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.
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