Question

Whispering Inc. reported the following pretax income (loss) and related tax rates during the years 2019–2022. Pretax Income (loss) Tax Rate 2019 $104,000 40 % 2020 (234,000) 40 % 2021 260,000 20 % 2022 130,000 20 % Pretax financial income (loss) and taxable income (loss) were the same for all years since Whispering began business. The tax rates from 2019–2022 were enacted in 2019. Partially correct answer iconYour answer is partially correct. Prepare the journal entries for the years 2020–2022 to record income taxes payable (refundable), income tax expense (benefit), and the tax effects of the loss carryforward. Assume that Whispering 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 2020 2021 2022 eTextbook and Media List of Accounts Partially correct answer iconYour answer is partially correct. Prepare the portion of the income statement, starting with “Operating loss before income taxes,” for 2020. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Whispering Inc. Income Statement (Partial) $ $ eTextbook and Media List of Accounts Partially correct answer iconYour answer is partially correct. Prepare the portion of the income statement, starting with “Income before income taxes,” for 2021. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Whispering Inc. Income Statement (Partial) $ $ $

Answer 1

					Amount in $
	Years	Pre tax Income	Tax rate	Tax	Post tax Income
	2019	104000	40%	41600	62400
	2020	-234000	40%	0	-234000
	2021	26000	20%	5200	20800
	2022	130000	20%	26000	104000
		Journal Entries
	Date	Account Titles	Debit	Credit
	30-09-19	Income Tax Expense A/c Dr	41600
		To Income tax Payable A/c		41600
		(Being Income Tax Expense recognized)
	30-09-19	Profit & Loss A/c Dr	41600
		To Income Tax Expense A/c		41600
		(Being adjusting Entry Passed)
	30-09-20	No Entry since there is loss in current year
		(Since loss occurred in current year,no income tax is payable)
	30-09-20	No Entry since there is loss in current year
		(Since loss occurred in current year,no income tax is payable)
	30-09-21	Income Tax Expense A/c Dr	5200
		To Income tax Payable A/c		5200
		(Being Income Tax Expense recognized after adjusting loss of previous year)
	30-09-21	Profit & Loss A/c Dr	5200
		To Income Tax Expense A/c		5200
		(Being adjusting Entry Passed)
	30-09-22	Income Tax Expense A/c Dr	26000
		To Income tax Payable A/c		26000
		(Being Income Tax Expense recognized)
	30-09-22	Profit & Loss A/c Dr	26000
		To Income Tax Expense A/c		26000
		(Being adjusting Entry Passed)