Prepare journal entry to recognize the income tax benefit

Reference no: EM131901977

Question: Wynn Sheet Metal reported a net operating loss of $106,000 for financial reporting and tax purposes in 2016. The enacted tax rate is 30%. 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
2012	$63,000	20%	$12,600
2013	73,000	20	14,600
2014	83,000	30	24,900
2015	63,000	40	25,200

Required: 1. Prepare the journal entry to recognize the income tax benefit of the net operating loss. Wynn elects the carryback option. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in thousands and round your answers to 1 decimal place.)

2. Show the lower portion of the 2016 income statement that reports the income tax benefit of the net operating loss. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in thousands and round your answers to 1 decimal place.)

Reference no: EM131901977

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