Question
In: Accounting
During 2018, its first year of operations, Baginski Steel Corporation reported a net operating loss of...
During 2018, its first year of operations, Baginski Steel
Corporation reported a net operating loss of $405,000 for financial
reporting and tax purposes. The enacted tax rate is 40%.
Required:
1. Prepare the journal entry to recognize the
income tax benefit of the net operating loss. Assume the weight of
available evidence suggests future taxable income sufficient to
benefit from future deductible amounts from the net operating loss
carryforward.
2. Show the lower portion of the 2018 income
statement that reports the income tax benefit of the net operating
loss.
Solutions
ekkarill92 answered 1 year agoRelated Solutions
In its first year of existence (year 1), SCC corporation (a C corporation) reported a loss...
In its first year of existence (year 1), SCC corporation (a C
corporation) reported a loss for tax purposes of $30,000. How much
tax will SCC pay in year 2 if it reports taxable income from
operations of $20,000 before considering loss carryovers under the
following assumptions? (New Corporate income tax rate has
been mentioned as "21% on all taxable income" as per the recent
change. Leave no answer blank. Enter zero if
applicable.)
b. Year 1 is 2018. What...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as...
During Heaton Company’s first two years of operations, it
reported absorption costing net operating income as follows:
Year 1
Year 2
Sales (@ $63 per unit)
$
1,071,000
$
1,701,000
Cost of goods sold (@ $34 per unit)
578,000
918,000
Gross margin
493,000
783,000
Selling and administrative expenses*
300,000
330,000
Net operating income
$
193,000
$
453,000
* $3 per unit variable; $249,000 fixed each year.
The company’s $34 unit product cost is computed as follows:
Direct materials
$
6...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as...
During Heaton Company’s first two years of operations, it
reported absorption costing net operating income as follows:
Year 1
Year 2
Sales (@ $61 per unit)
$
1,037,000
$
1,647,000
Cost of goods sold (@ $38 per
unit)
646,000
1,026,000
Gross margin
391,000
621,000
Selling and administrative
expenses*
300,000
330,000
Net operating income
$
\91,000\
$
291,000
* $3 per unit variable; $249,000 fixed each year.
The company’s $38 unit product cost is computed as follows:
Direct
materials
$
7...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as...
During Heaton Company’s first two years of operations, it
reported absorption costing net operating income as follows:
Year 1
Year 2
Sales (@ $61 per
unit)
$
915,000
$
1,525,000
Cost of goods
sold (@ $41 per unit)
615,000
1,025,000
Gross
margin
300,000
500,000
Selling and
administrative expenses*
292,000
322,000
Net operating
income
$
8,000
$
178,000
* $3 per unit variable; $247,000 fixed each year.
The company’s $41 unit product cost is computed as follows:
Direct materials
$
10...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as...
During Heaton Company’s first two years of operations, it
reported absorption costing net operating income as follows:
Year 1
Year 2
Sales (@ $62 per unit)
$
992,000
$
1,612,000
Cost of goods sold (@ $38 per unit)
608,000
988,000
Gross margin
384,000
624,000
Selling and administrative expenses*
298,000
328,000
Net operating income
$
86,000
$
296,000
* $3 per unit variable; $250,000 fixed each year.
The company’s $38 unit product cost is computed as follows:
Direct materials
$
9...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as...
During Heaton Company’s first two years of operations, it
reported absorption costing net operating income as follows:
Year 1
Year 2
Sales (@ $62 per unit)
$
1,054,000
$
1,674,000
Cost of goods sold (@ $35 per
unit)
595,000
945,000
Gross margin
459,000
729,000
Selling and administrative
expenses*
300,000
330,000
Net operating income
$
\159,000\
$
399,000
* $3 per unit variable; $249,000 fixed each year.
The company’s $35 unit product cost is computed as follows:
Direct
materials
$
6...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as...
During Heaton Company’s first two years of operations, it
reported absorption costing net operating income as follows:
Year 1
Year 2
Sales (@ $60 per unit)
$
900,000
$
1,500,000
Cost of goods sold (@ $38 per unit)
570,000
950,000
Gross margin
330,000
550,000
Selling and administrative expenses*
294,000
324,000
Net operating income
$
36,000
$
226,000
* $3 per unit variable; $249,000 fixed each year.
The company’s $38 unit product cost is computed as follows:
Direct materials
$
8...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as...
During Heaton Company’s first two years of operations, it
reported absorption costing net operating income as follows:
Year 1
Year 2
Sales (@ $63 per unit)
$
1,260,000
$
1,890,000
Cost of goods sold (@ $43 per unit)
860,000
1,290,000
Gross margin
400,000
600,000
Selling and administrative expenses*
314,000
344,000
Net operating income
$
86,000
$
256,000
* $3 per unit variable; $254,000 fixed each year.
The company’s $43 unit product cost is computed as follows:
Direct materials
$
9...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as...
During Heaton Company’s first two years of operations, it
reported absorption costing net operating income as follows:
Year 1
Year 2
Sales (@ $62 per unit)
$
1,054,000
$
1,674,000
Cost of goods sold (@ $43 per unit)
731,000
1,161,000
Gross margin
323,000
513,000
Selling and administrative expenses*
299,000
329,000
Net operating income
$
24,000
$
184,000
* $3 per unit variable; $248,000 fixed each year.
The company’s $43 unit product cost is computed as follows:
Direct materials
$
9...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as...
During Heaton Company’s first two years of operations, it
reported absorption costing net operating income as follows:
Sales (@ $62 per unit)
$
1,178,000
$
1,798,000
Cost of goods sold (@ $35 per unit)
665,000
1,015,000
Gross margin
513,000
783,000
Selling and administrative expenses*
312,000
342,000
Net operating income
$
201,000
$
441,000
* $3 per unit variable; $255,000 fixed each year.
The company’s $35 unit product cost is computed as follows:
Direct materials
$
6
Direct labor
12
Variable...
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