Jennings Inc. reported the following pretax income (loss) and related tax rates during the years 2008–2014.
Pretax financial income (loss) and taxable income (loss) were the same for all years since Jennings began business. The tax rates from 2011–2014 were enacted in 2011.
a. Prepare the journal entries for the years 2012-2014 to record income taxes payable (refundable), income tax expense (benefit), and the tax effects of the loss carryback and carryforward. Assume that Jennings elects the carryback provision where possible and expects to realize the benefits of any loss carryforward in the year that immediately follows the loss year. -
b. Indicate the effect the 2012 entry (ies) has on the December 31, 2012 balance sheet. -
c. Prepare the portion of the income statement, starting with “Operating loss before income taxes,” for 2012 -
d. Prepare the portion of the income ststement, starting with “Income before income taxes,” for 2013. -