Prepare the journal entry to recognize income tax benefit

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Reference no: EM132088001

Question: Wynn Sheet Metal reported an operating loss of $184,000 for financial reporting and tax purposes in 2016. The enacted tax rate is 40%. 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	$72,000	30%	$21,600
2013	82,000	30	24,600
2014	92,000	40	36,800
2015	72,000	45	32,400

Required: 1. Complete the following table given below and prepare the journal entry to recognize the income tax benefit of the 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. Leave no cell blank, enter "0" wherever applicable.)

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

Reference no: EM132088001

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