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Question - Trenton Co. incurred a net operating loss of $850,000 in 2014. Combined income of 2012 and 2013 was $650,000. The tax rate for all years is 30%. Trenton elects the carry back option.
Required:
Prepare the journal entries to record the benefit of loss carry back and loss carry forward option.
Assuming that it is more likely than not that the entire net operating loss carry forward will not be realized in future years, prepare all the journal entries necessary at the end of 2014.
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