S & C Company reported income before taxes of $111,000 for the years 2013,2014,and 2015.In 2016 they experienced a loss of $222,000.S & C had a tax rate of 30% in 2013 and 2014,and a rate of 40% is 2015 and 2016.The company elects to carry back the loss.What is the necessary journal entry to record the NOL carryback in the year of the loss?

Question

Quizplus · Accepted Answer

The necessary journal entry to record the NOL carryback is to first calculate the tax benefit of the NOL, which is the NOL multiplied by the tax rate in the carryback year. Then, the entry should be a debit to income tax receivable for the tax benefit and a credit to income tax expense for the same amount. Choice B correctly shows this calculation and the entry.

S & C Company Reported Income Before Taxes of $111,000