Question

ivanhoe Inc. reported the following pretax income (loss) and related tax rates during the years 2013–2019.

Pretax Income (loss) Tax Rate

2013 $37,700 30 %

2014 23,100 30 %

2015 54,100 30 %

2016 76,800 40 %

2017 (166,200 ) 45 %

2018 76,200 40 %

2019 94,100 35 %

Pretax financial income (loss) and taxable income (loss) were the same for all years since Ivanhoe began business. The tax rates from 2016–2019 were enacted in 2016.

Prepare the journal entries for the years 2017–2019 to record income taxes payable (refundable), income tax expense (benefit), and the tax effects of the loss carryback and carryforward. Assume that Ivanhoe elects the carryback provision where possible and expects to realize the benefits of any loss carryforward in the year that immediately follows the loss year.

(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.)

Date Account Titles and Explanation Debit Credit

2017 Income Tax Refund Receivable 46950

Benefit Due to Loss Carryback 46950

(To record carryback.)

Deferred Tax Asset 14120

Benefit Due to Loss Carryforward 14120

(To record carryforward.)

2018 Income Tax Expense 22960

Deferred Tax Asset 14120

Income Tax Payable 8840

2019 Income Tax Expense 32935

Income Tax Payable 32935

SHOW LIST OF ACCOUNTS Prepare the portion of the income statement, starting with “Operating loss before income taxes,” for 2017. (Enter loss using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Ivanhoe Inc. Income Statement (Partial)

$ -166200

$ 46950

14120

61070 $

-105130

SHOW LIST OF ACCOUNTS Prepare the portion of the income statement, starting with “Income before income taxes,” for 2018. (Enter loss using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Ivanhoe Inc. Income Statement (Partial)

$ 76200

$ 14120 $

PLEASE HELP!

Answer 1

Journal entries

Date	Account titles and explanation	Debit	Credit
2017	Income Tax Refund Receivable 2012 ($54100 × 30%)	16230
	Income Tax Refund Receivable 2013 ($76800 × 40%)	30720
	Benefit Due to Loss Carryback		46950
2017	Deferred Tax Asset [($166200-$54100-$76800) × 40%]	14120
	Benefit Due to Loss Carryforward		14120
2018	Income Tax Expense	30480
	Deferred Tax Asset		14120
	Income Tax Payable [($76200-35300) × 40%]		16360
2019	Income Tax Expense	32935
	Income Tax Payable ($94100 × 35%)		32935

2017 Income statement

Operating loss before income taxes		(166200)
Income tax benefit
Benefit due to loss carryback	46950
Benefit due to loss carryforward	14120	61070
Net loss		105130

2018 income statement

Income before income taxes		76200
Income tax expense
Current	16360
Deferred	14120	(30480)
Net income		45720