Wynn Farms reported a net operating loss of $195,000 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 IncomeTax RatesIncome Taxes Paid2020 $ 67,00030%$20,100202177,0003023,1002022115,0004046,000202340,0004518,000 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.Show the lower portion of the 2024 income statement that reports the income tax benefit of the net operating loss. 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 following table to recognize the income tax benefit ofthe net operating loss. Note: Enter your answers in whole dollars. Leave no cell blank, enter "0" wherever applicable. Enter allamounts as positive values.Operating loss carrybackCarried back - 2020Carried back - 2021Carried back - 2022Carried back - 2023Total carrybackOperating loss carryforwardCarried forwardxXXXXRate %30% =$30% = $40% =45% =25%=69Tax $00Recorded as:0 Receivable-income tax refundDeferred tax asset-endingShow less Show the lower portion of the 2024 income statement that reports the income tax benefit of the net operating loss.Note: Amounts to be deducted should be indicated with a minus sign. Enter your answers in whole dollars.Operating loss before income taxesIncome tax benefit:00

Answered: Wynn Farms reported a net operating…

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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Wynn Farms reported a net operating loss of $195,000 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	Tax Rates	Income Taxes Paid
2020	$ 67,000	30%	$20,100
2021	77,000	30	23,100
2022	115,000	40	46,000
2023	40,000	45	18,000

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.
Show the lower portion of the 2024 income statement that reports the income tax benefit of the net operating loss.

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 following table to recognize the income tax benefit of
the net operating loss. Note: Enter your answers in whole dollars. Leave no cell blank, enter "0" wherever applicable. Enter all
amounts as positive values.
Operating loss carryback
Carried back - 2020
Carried back - 2021
Carried back - 2022
Carried back - 2023
Total carryback
Operating loss carryforward
Carried forward
x
X
X
X
X
Rate %
30% =
$
30% = $
40% =
45% =
25%
=
69
Tax $
0
0
Recorded as:
0 Receivable-income tax refund
Deferred tax asset-ending
Show less

Show the lower portion of the 2024 income statement that reports the income tax benefit of the net operating loss.
Note: Amounts to be deducted should be indicated with a minus sign. Enter your answers in whole dollars.
Operating loss before income taxes
Income tax benefit:
0
0

Expert Solution

Step 1

Income Tax:

The tax that taxpayers pay on the income earned by them in any accounting year is termed income tax, It is a direct tax and paid by the person directly to the federal or state government. Income tax can be calculated based on marginal rate or effective income tax rates.

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