) Marin Corporation had the following tax information. Year Taxable Income Tax Rate Taxes Paid 2015...

) Marin Corporation had the following tax information.

Year	Taxable Income	Tax Rate		Taxes Paid
2015	$303,000		36%		$109,080
2016	322,000		31%		99,820
2017	395,000		31%		122,450

In 2018, Marin suffered a net operating loss of $812,000, which it elected to carry back. The 2018 enacted tax rate is 32% (and this rate is expected to be in use for the foreseeable future).

Prepare Marin’s entry to record the effect of the loss carryback (and carryforward).

Expert Solution

Preparation of entry for loss carryback
Account Titles and Explanation	Debit (In $)	Credit (in $)
Income Tax Refund Receivable	$251,720
Benefit Due to Loss Carryback		$251,720

(To record the effect of the loss carryback)

*Workings:* Loss Carryback for 2017 = $395,000 Loss Carryback for 2016 = ($812,000 (-) $395,000) = $417,000 Benefit Due to Loss Carryback = ($395,000 + $417,000) x Tax rate in 2017 (i.e) 31% = $251,720

ekkarill92 answered 2 years ago

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