Reference no: EM132822

Question :

Jennings Inc. reported the subsequent pretax income loss and related tax rates during the years 2008-2014.

Pretax Income (loss)      Tax Rate

2008       $ 40,000              30%

2009       25,000   30%

2010       50,000   30%

2011       80,000   40%

2012       (180,000)             45%

2013       70,000   40%

2014       100,000                 35%

Pretax financial taxable income loss and income loss were the same for all years since Jennings started business. The tax rates from 2011-2014 were enacted in 2011.

 (a) Purpose the journal entries for the years 2012-2014 to record income taxes payable refundable, income tax expense benefit, and the tax effects of the loss carryforward and carryback. Consider that Jennings elects the carryback provision where possible and expects to understand the benefits of any loss carryforward in the year that instantly follows the loss year.