Prepare journal entry for years to record income tax expense

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Reference no: EM132499854

Starlight reported the following pretax financial income (loss) for the years 2018-2021.

Pretax Income (Loss) Tax Rate

2018 330,000 35%

2019 (60,000) 35%

2020 (800,000) 21%

2021 30,000 21%

  • Pretax financial income (loss) and taxable income (loss) were the same for all years involved.

Instruction

Question 1: Prepare the journal entries for the years 2019 to 2021 to record income tax expense and the effects of the net operating loss carryforwards. Additionally, assume that based on the weight of available evidence, the company judged that more likely than not that one-fifth of the benefits of the loss carryforward will not be realized.

Reference no: EM132499854

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