Question

The pretax financial income (or loss) figures for Windsor Company are as follows.

2015		$169,000
2016		247,000
2017		79,000
2018		(169,000	)
2019		(356,000	)
2020		131,000
2021		99,000

Pretax financial income (or loss) and taxable income (loss) were the same for all years involved. Assume a 25% tax rate for 2015 and 2016 and a 20% tax rate for the remaining years.

Prepare the journal entries for the years 2017 to 2021 to record income tax expense and the effects of the net operating loss carryforwards. All income and losses relate to normal operations. (In recording the benefits of a loss carryforward, assume that no valuation account is deemed necessary.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation	Debit	Credit
2017
enter an account title to record carryback	enter a debit amount	enter a credit amount
enter an account title to record carryback	enter a debit amount	enter a credit amount
2018
enter an account title to record carryforward	enter a debit amount	enter a credit amount
enter an account title to record carryforward	enter a debit amount	enter a credit amount
2019
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount
2020
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount
2021
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a credit amount	enter a debit amount

This is all of the information given in the problem. There is no other mention of time.

Answer 1

Answer :
Income tax expenses for the year 2017
Income tax expense =   Taxable income x 20%                                                                                  = $79,0000 x 20%                                                                                  = $15,800
Date	Account Title and Explanation	Debit($)	Credit($)
				2017	Income tax expense	$15,800
					Income tax payable		$15,800
	(Being tax is calculated and is a liability to be paid)
Income tax expenses for the year 2018
Income tax refund receivable = Taxable loss x 25%                              Income tax Expense                    =   $169,000 x 25%                                                                                           = $42,250
Date	Account Title and Explanation	Debit($)	Credit($)
				2018	Income tax refund receivable	$42,250
					Income tax refund due to loss                            carryback		$42,250
	(To record the refund receivable.)
Income tax expenses for the year 2019
Benefit due to loss carry back (income tax expense)    = $79,000 x 20%                                                                                                                       = $15,800
Benefit due to loss carry forward(income tax expense)                                                                    = [($356,000 - $79,000) x 20%]                                                                    = $55,400
Date	Account Title and Explanation	Debit($)	Credit($)
				2019	Income tax expense	$15,800
					Income tax payable		$15,800
	(Being tax is calculated and is a liability to                                                   be paid)
2019	Deferred tax asset	$55,400
	Income tax refund		$55,400
	(To record the refund receivable)
Income tax expenses for the year 2020
Deferred tax assets    = $131,000 x 20%                                                                                   = $26,200
Date	Account Title and Explanation	Debit($)	Credit($)
				2020	Income tax expense	$26,200
					Deferred tax asset		$26,200
	(To record the deferred tax assets.)
Income tax expenses for the year 2021
Deferred tax assets    = $99,000 x 20%                                                                                   = $19,800
Date	Account Title and Explanation	Debit($)	Credit($)
				2021	Income tax expense	$19,800
					Deferred tax asset		$19,800
	(To record the deferred tax assets)