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Homework answers / question archive / The pretax financial income (or loss) figures for Splish Brothers Company are as follows
The pretax financial income (or loss) figures for Splish Brothers Company are as follows.
2017 -86,000 2018-(42,000) 2019- (37,000) 2020- 129,000 2021- 99,000
Pretax financial income (or loss) and taxable income (loss) were the same for all years involved. Assume a 25% tax rate for 2017 and a 20% tax rate for the remaining years.
Prepare the journal entries for the years 2017 to 2021 to record income tax expense and the effects of the net operating loss carryforwards. All income and losses relate to normal operations. (In recording the benefits of a loss carryforward, assume that no valuation account is deemed necessary.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
| Journal Entries: | |||
| Date | Account Titles | Debit | Credit |
| 2017 | Income Tax Expense ($86,000*25%) | $21,500 | |
| Provision for Income Tax | $21,500 | ||
| 2018 | Deferred Tax Asset ($42,000*20%) | $8,400 | |
| Income Tax Benefit | $8,400 | ||
| 2019 | Deferred Tax Asset ($37,000*20%) | $7,400 | |
| Income Tax Benefit | $7,400 | ||
| 2020 | Income Tax Expense ($129,000*20%) | $25,800 | |
| Deferred Tax Asset | $15,800 | ||
| Provision for Income Tax ($25,800-$8,400-$7,400) | $10,000 | ||
| 2021 | Income Tax Expense ($99,000*20%) | $19,800 | |
| Provision for Income Tax | $19,800 | ||
