CHAPTER 16 (9.)

Wynn Sheet Metal reported an operating loss of $164,000 for financial reporting and tax purposes in 2018. The enacted tax rate is 40%. Taxable income, tax rates, and income taxes paid in Wynns first four years of operation were as follows:

	Taxable Income			Tax Rates			Income Taxes Paid
2014	$	62,000		30	%		$	18,600
2015		72,000		30				21,600
2016		82,000		40				32,800
2017		62,000		45				27,900

Required: 1. Complete the following table given below and prepare the journal entry to recognize the income tax benefit of the operating loss. Wynn elects the carryback option. 2. Show the lower portion of the 2018 income statement that reports the income tax benefit of the operating loss.

Required 1 Required 1 GJ Required 2 Calculation Complete the following table given below to record income taxes. (Enter your answers in thousands. Round your answers to two decimal places. Leave no cell blank, enter "0" wherever applicable.) Rate % Tax $ Operating loss carryback Recorded as: 82 Carried back - 2014 62% 51 X Carried back 2015 0 Carried back 2016 X Carried back 2017 X = Total carryback S 51.00 Operating loss carryforward Carried forward X Required 1 Required 1 GJ Required 2 Calculation Prepare the journal entry to recognize the income tax benefit of the operating loss. Wynn elects the carryback option. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to two decimal places. Enter your answers in thousands.) No Event General Journal Debit Credit Accounts receivable 1 60.70 1 Income tax benefit-Net operating loss 60.70 Deferred tax asset 8.00 Deferred tax asset 8.00 Required 1 Calculation Required 1 GJ Required 2 Show the lower portion of the 2018 income statement that reports the income tax benefit of the operating loss. (Amounts to be deducted should be indicated with a minus sign. Round your answers to two decimal places. Enter your answers in thousands.) S 164.00 Operating loss before income taxes Income tax benefit: Tax refund from loss carryback 60.70 8.00 68.70 S 232.70