Wynn Farms reported a net operating loss of $160,000 for financial reporting and tax purposes in 2021. The enacted tax r

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Wynn Farms Reported A Net Operating Loss Of 160 000 For Financial Reporting And Tax Purposes In 2021 The Enacted Tax R 1 (178.81 KiB) Viewed 56 times

Wynn Farms reported a net operating loss of $160,000 for financial reporting and tax purposes in 2021. 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: 2017 2018 2019 2020 Taxable Tax Income Rates Income Taxes Paid $ 75,000 20% 85,000 20 140,000 25 75,000 40 Required: 1. Prepare the journal entry to recognize 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. 2. Show the lower portion of the 2021 income statement that reports the income tax benefit of the net operating loss. Required 1 Required 2 Complete this question by entering your answers in the tabs below. No $15,000 17,000 35,000* 30,000 1 Prepare the journal entry to recognize 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. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.) X Answer is not complete. Event 1 General Journal Receivable-Income tax refund Income tax expense < Required 1 33 Required 2 > Debit 21,250 X Credit 18,000 X