Train, Inc. incurred a net operating loss of $600,000 in 2010. For 2008 and 2009 the combined income for those years amounted to $400,000. The tax rate for all years is 30%. Train elects the carryback option. Select the correct journal entries to record the benefits of the loss carryback and the loss carryforward.
a) Income tax refund receivable $400,000 Benefit due to loss carryback $400,000 JE #2 Deferred tax asset $600,000 Benefit due to loss carryforward $600,000
b) Income tax refund receivable $60,000 Benefit due to loss carryback $60,000 JE #2 Deferred tax asset $60,000 Benefit due to loss carryforward $60,000
c) Income tax refund receivable $120,000 Benefit due to loss carryback $120,000 JE #2 Deferred tax asset $60,000 Benefit due to loss carryforward $60,000
d) Income tax refund receivable $180,000 Benefit due to loss carryback $180,000 JE #2 Deferred tax asset $60,000 Benefit due to loss carryforward $60,000.