Figures for Synergetics Company are as follows.
2014.................................$160,000
2015...................................250,000
2016....................................90,000
2017.................................(160,000)
2018.................................(350,000)
2019..................................120,000
2020.................................100,000
Pretax financial income (or loss) and taxable income (loss) were the same for all years involved. Assume a 45% tax rate for 2014 and 2015 and a 40% tax rate for the remaining years.
Instructions
Prepare the journal entries for the years 2016 to 2020 to record income tax expense and the effects of the net operating loss carrybacks and carryforwards, assuming Synergetics Company uses the carryback provision. All income and losses relate to normal operations. (In recording the benefits of a loss carryforward, assume that it is probable the loss carryforward will be realized.)