Recording Net Operating Loss Carryback

During Year 4, Lamb Inc. suered a tax loss of $(400,000). Lamb qualies 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: $360,000; Year 2: $320,000; and Year 3: $120,000. The tax rate is 40% for Year 3 and Year 4, and 25% for Year 1 and Year 2. Prepare Lambs entry for the loss carryback on December 31 of Year 4.

Date	Account Name	Dr.	Cr.
Dec. 31, Year 4	DR
	CR
	To record net operating loss carryback