Andrew, Inc. provides DJ services for corporate parties. Andrew reported a net operating loss of $ 750,000
Question:
Although Andrew had a net operating loss in 2016, it was due to an unusual event. Andrew€™s management has substantial evidence to indicate that the company will be profitable over the foreseeable future and will incur a 34% tax rate for each of those years. In fact, during 2017, Andrew reported a profit of $ 800,000. Andrew does not report any book- tax differences.
Required
a. Prepare the journal entries to account for the NOL carryback and NOL carryforward in 2016. b. Compute reported net income (loss) after tax for 2016.
c. Prepare the journal entries to account for income taxes in 2017.
d. Compute reported net income after tax for 2017.
Step by Step Answer:
Intermediate Accounting
ISBN: 978-0132162302
1st edition
Authors: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella