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What would the journal entries be

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Question - In 2019, the first year of operations, for XYZ Ltd. reports a taxable income of $160,000 and paid $40,000 of income taxes. It is now the end of the second year, and the company has just had an unexpected loss of $275,000 for tax purposes due to a global pandemic. The company's management believes it is likely the company will be able to use up its tax losses, once things return to normal. The tax rate is currently 25% in 2020 but it is expected to decrease to 20% for the foreseeable future. Assume the company has very good cash-flow and lots of shareholder financing available and wants to maximize profitability in future periods. What would the journal entries be for the above information?

Reference no: EM132913826

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