80.2K

Verified Solution

Link Copied!

In 2018, its first year of operations, Kimble Corp. has a $700,000 net operating loss when the tax rate is 30%. In 2019, Kimble has $250,000 taxable income and the tax rate remains 30%. Assume the management of Kimble Corp. thinks that it is more likely than not that the loss carryforward will not be realized in the near future because it is a new company (this is before results of 2019 operations are known).

(a) Your answer has been saved and sent for grading. See Gradebook for score details. What are the entries in 2018 to record the tax effects of the loss carryforward? (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit (To recognize benefit of loss carryforward) (To record allowance amount) Click if you would like to Show Work for this question: Open Show Work SHOW LIST OF ACCOUNTS Attempts: 1 of 1 used

(b) What entries would be made in 2019 to record the current and deferred income taxes and to recognize the loss carryforward? (Assume that at the end of 2019 it is more likely than not that the deferred tax asset will be realized.) (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit (To record current and deferred income taxes) (To eliminate allowance and recognize loss carryforward)

Answer & Explanation Solved by verified expert

See Answer