a) The necessary journal entry to record the NOL carryback.
b) A partial income statement beginning with the net loss before benefit.
What will be an ideal response?
Answer:
a) Journal Entry:
Income Tax Refund Receivable
228,900
Income Tax Benefit
228,900*
*(654,000 × 35%)
b) Partial Income Statement:
Net loss before tax benefit $(654,000)
Income tax benefit 228,900
Net loss after tax benefit $(425,100)