financial accounting journal entry

timer Asked: Oct 28th, 2015

Question description

Colorado Company has decided to use the loss carryback and carryforward provision as a result of the year 2017 loss. The enacted tax rate remains at 40% after year 2017. Colorado Company has determined that a valuation allowance is not necessary.

Year   Taxable income    Income tax rate

2014   $390,000              35% 

2015   $320,000           37%

2016     $400,000         40%

2017  ($1,200,000)  40%

Prepare the journal entry on December 31, 2017 to record the carryback and carryforward decision.

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