Recording Net Operating Loss Carryback

During Year $4,$ Lamb Inc. su$$ered a tax loss of $$(200,000).$ Lamb quali$$es for a two$-$year loss carryback option for tax purposes, using the earliest year $$rst and with no income restrictions. Taxable income for the last three years $($listed in chronological order$)$ follows: Year $1$: $$180,000$; Year $2$: $$160,000$; and Year $3$: $$60,000.$ The tax rate is $40\%$ for Year $3$ and Year $4,$ and $25\%$ for Year $1$ and Year $2.$ Prepare Lamb$$s entry for the loss carryback on December $31$ of Year $4.$

Date Account Name Dr$.$ Cr$.$

Dec. $31,$ Year $4$

$0$

Answer $1$

$0$

Answer $2$Incorrect

Mark $0\mathrm{.}00$ out of $1\mathrm{.}00$

To record net operating loss carryback