ACCT 312 Week 1 Homework (Updated)

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ACCT 312 Week 1 Homework (Updated)

Ex. 16-22: Operating loss carryback and carry forward

This exercise is based on the situation described in E 16–21, modified to include a carryforward in addition to a carryback.)

Wynn Sheet Metal reported an operating loss of $160,000 for financial reporting and tax purposes in 2013. 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 IncomeTax RatesIncome Taxes Paid
2009 $            60,00030% $                18,000
2010 $            70,00030% $                21,000
2011 $            80,00040% $                32,000
2012 $            60,00050% $                27,000

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Items 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 2013 income statement that reports the income tax benefit of the operating loss.



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