Wynn Farms reported a net operating loss of $140,000 for financial reporting and tax purposes...
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Accounting
Wynn Farms reported a net operating loss of $140,000 for financial reporting and tax purposes in 2024. The enacted tax rate is 25%. Taxable income, tax rates, and income taxes paid in Wynns first four years of operation were as follows:
Taxable Income
Tax Rates
Income Taxes Paid
2020
$ 70,000
30%
$ 21,000
2021
80,000
30
24,000
2022
120,000
25
30,000
2023
70,000
45
31,500
Required:
Prepare the journal entry to recognize the income tax benefit of the net operating loss. NOL carrybacks are not allowed for most companies, except for property and casualty insurance companies as well as some farm-related businesses. Assume Wynn is one of those businesses.
Show the lower portion of the 2024 income statement that reports the income tax benefit of the net operating loss.
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