Tobac Company reported an operating loss of $125,000 for financial reporting and tax purposes in 2021....

 

Transcribed Image Text:

Tobac Company reported an operating loss of $125,000 for financial reporting and tax purposes in 2021. The enacted tax rate is 25% for 2021 and all future years. Assume that Tobac operates in an industry for which NOL carryback is allowed and elects a loss carryback. No valuation allowance is needed for any deferred tax assets. Taxable income, tax rates, and income taxes paid in Tobac's first four years of operations were as follows: Taxable incone $23,000 $28,000 $35,000 $33,000 Tax rates Тахея paid $ 6,900 * 8,400 $12,250 $13,200 2017 2018 J0 35% 40% 2019 2020 Required: 1. Prepare a compound journal entry to record Tobac's tax provision for the year 2021. 2. Compute Tobac's net loss for 2021. Tobac Company reported an operating loss of $125,000 for financial reporting and tax purposes in 2021. The enacted tax rate is 25% for 2021 and all future years. Assume that Tobac operates in an industry for which NOL carryback is allowed and elects a loss carryback. No valuation allowance is needed for any deferred tax assets. Taxable income, tax rates, and income taxes paid in Tobac's first four years of operations were as follows: Taxable incone $23,000 $28,000 $35,000 $33,000 Tax rates Тахея paid $ 6,900 * 8,400 $12,250 $13,200 2017 2018 J0 35% 40% 2019 2020 Required: 1. Prepare a compound journal entry to record Tobac's tax provision for the year 2021. 2. Compute Tobac's net loss for 2021.

Answer rating: 100% (QA)

The loss carry back can be allowed for previous two years ie 2019 and 2020 in this case First... View the full answer