Wynn Farms reported a net operating loss of $185,000 for financial reporting and tax purposes in 2024. The enacted tax rate is 25%. Taxable income, tax rates, and income taxes paid in Wynn's first four years of operation were as follows: Taxable Income Income Taxes Tax Rates Paid 2020 2021 $ 65,000 30% $19,500 2022 2023 75,000 105,000 60,000 30 22,500 40 45 42,000 27,000 Required: 1. NOL carrybacks are not allowed for most companies, except for property and casualty insurance companies as well as some farm-related businesses. Assume Wynn is one of those businesses. Complete the table given below and prepare the journal entry to recognize the income tax benefit of the net operating loss. 2. Show the lower portion of the 2024 income statement that reports the income tax benefit of the net operating loss.
Wynn Farms reported a net operating loss of $185,000 for financial reporting and tax purposes in 2024. The enacted tax rate is 25%. Taxable income, tax rates, and income taxes paid in Wynn's first four years of operation were as follows: Taxable Income Income Taxes Tax Rates Paid 2020 2021 $ 65,000 30% $19,500 2022 2023 75,000 105,000 60,000 30 22,500 40 45 42,000 27,000 Required: 1. NOL carrybacks are not allowed for most companies, except for property and casualty insurance companies as well as some farm-related businesses. Assume Wynn is one of those businesses. Complete the table given below and prepare the journal entry to recognize the income tax benefit of the net operating loss. 2. Show the lower portion of the 2024 income statement that reports the income tax benefit of the net operating loss.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Wynn Farms reported a net operating loss of $185,000 for financial reporting and tax purposes in 2024. The enacted tax rate is 25%.
Taxable income, tax rates, and income taxes paid in Wynn's first four years of operation were as follows:
Taxable
Income
Income Taxes
Tax Rates
Paid
2020
$ 65,000
30%
$19,500
2021
2022
2023
75,000
105,000
30
22,500
40
60,000
45
42,000
27,000
Required:
1. NOL carrybacks are not allowed for most companies, except for property and casualty insurance companies as well as some
farm-related businesses. Assume Wynn is one of those businesses. Complete the table given below and prepare the journal
entry to recognize the income tax benefit of the net operating loss.
2. Show the lower portion of the 2024 income statement that reports the income tax benefit of the net operating loss.
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