Prepare the income tax section

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Question -

Pina Inc. reports the following pretax income (loss) for both book and tax purposes. (Assume the carryback provision is used where possible for a net operating loss.)

Year

Pretax
Income (Loss)

Tax Rate

2015

$123,000

40%

2016

98,000

40%

2017

(270,000)

45%

2018

110,000

45%

The tax rates listed were all enacted by the beginning of 2015.

(a) Prepare the journal entries for years 2015-2018 to record income tax expense (benefit) and income taxes payable (refundable), and the tax effects of the loss carryback and loss carryforward, assuming that based on the weight of available evidence, it is more likely than not that one-half of the benefits of the loss carryforward will not be realized.

(b) Prepare the income tax section of the 2017 income statement beginning with the line "Operating loss before income taxes."

Reference no: EM131590368

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