Big Bear Sporting Goods opened in 2015. They reported sales revenue of $395,000 and expenses of $445,000. There are no permanent or temporary differences, so the book loss and taxable loss will be the same. Big Bear plans on carrying forward the net operating loss (NOL). Assuming a 32% tax rate, what is the necessary journal entry in 2015 to record the NOL carryforward?

A)
Income Tax Refund Receivable
126,400

Income Tax Benefit

126,400

B)
Deferred Tax Asset
126,400

Income Tax Benefit

126,400

C)
Income Tax Refund Receivable
16,000

Income Tax Benefit

16,000

D)
Deferred Tax Asset
16,000

Income Tax Benefit

16,000

Answer: D
Explanation: D) (395,000 – 445,000) × 32% = $16,000