The following information is taken from the financial statements of Aruban Enterprises.
|
Taxable and Pretax
|
|
|
|
Year
|
Financial Income
|
Income Tax Rate
|
Income Tax Paid
|
|
2004
|
$32,000
|
40%
|
$12,800
|
|
2005
|
29,300
|
35
|
10,255
|
|
2006
|
33,100
|
40
|
13,240
|
|
2007
|
22,500
|
34
|
7,650
|
|
2008
|
(94,300)
|
35
|
0
|
The company elects to use the carryback provisions of the tax law.
Instructions:
1. Given the information from the financial statements, compute the amount of income tax refund due as a result of the operating loss in 2008.
2. What is the amount, if any, of the operating loss carry forward? How would the operating loss carry forward be reflected in the financial statements?
3. Assume the foregoing information except as follows:
(a) The loss in 2008 was $39,000. Calculate the refund due and prepare the journal entry to record the claim for income tax refund.
(b) In addition to (a), there was a loss of $28,000 in 2009.How much could be carried back, and how much could be carried forward?