Wynn Sheet Metal reported an operating loss of $190,000 for financial reporting and tax purposes in 2018. The enacted tax rate is 40%. Taxable income, tax rates, and income taxes paid in Wynn's first four years of operation were as follows:

 

                               Taxable Income   Tax  Rates    Income Taxes Paid

2014                                $ 75,000            30 %               $ 22,500

2015                                  85,000              30                    25,500

2016                                  95,000              40                    38,000

2017                                  75,000              45                   33,750          

 Required:

 1. 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

Answer rating: 100% (QA)

1 Journal entry to recognize the income tax benefit of the operating loss Income Tax Benefit Dr 7600... View the full answer