Refer to Violet Corporation. Violet reported taxable income of $325,000 in 2016. What is the necessary journal entry for 2016?

A)
Income Tax Refund Receivable
123,000

Deferred Tax Asset
72,000

Income Tax Benefit

195,000

B)
Income Tax Refund Receivable
25,500

Deferred Tax Asset
72,000

Income Tax Benefit

97,500

C)
Income Tax Expense
195,000

Income Tax Payable

123,000
Deferred Tax Asset

72,000

D)
Income Tax Expense
97,500

Income Tax Payable

25,500
Deferred Tax Asset

72,000

Answer: D
Explanation: D) Expense: 325,000 × 30%. Payable: (325,000 – 240,000) × 30%. The NOL is carried back 2 years, with the remaining balance carried forward to 2016.