LLP Beverages Inc. has a policy of carrying back tax losses before carrying any remaining amounts forward. LLP Beverages reported the following pre-tax accounting incomes (losses) for a period of 6 years:

Accounting

Year        Income (Loss)         Tax Rate

2019              $                          - 21%

2020        $ 127,160                   21%

2021          $ 55,956                   21%

2022       $ (201,440)                  22%

2023         $ 154,220                  22%

2024        $ (445,280)                 22%

Note that income (loss) for tax purposes is the same as accounting income (loss) for all years. The income tax rate is not expected to change following the 2024 year.

Required:

Prepare year-end journal entries for income tax for 2020 to 2024. Assume that LLP Beverages follows IFRS, and has a year end of June 31. Any loss carryforward benefits are judged more likely than not to be realized in future years.

Answer rating: 100% (QA)

A loss carryback describes a situation in which a business experiences a net operating loss and chooses to apply that loss to a prior years tax return This results in an immediate refund of taxes prev... View the full answer