Question - In 2012, P & P Products had net income of $10,000. In 2013, P & P Products had a net operating loss of $50,000 and in 2014, P & P Products reported net income of $70,000. Assume a tax rate of 20% for all years presented.
Required
a. Prepare the entry that P & P Products should have made in 2013.
b. Prepare an entry for the year 2014 to record the effect of the Net Operating Loss from 2013.