The journal entry for Marigold Inc. at the end of 2017 to record carryback is as follows:
<h3>Journal Entry:</h3>
Debit Income Taxes Receivable $72,000
Credit Benefit Due to Loss Carry back $72,000
- To record the refund of income taxes paid in the prior two years due to the loss recorded in 2017.
<h3>Data and Calculations:</h3>
Operating loss in 2017 = $482,000
Combined income for 2015 and 2016 = $360,000
Tax rate = 20%
Tax expenses for 2015 and 2016 = $72,000 ($360,000 x 20%)
<h3>Complete Question:</h3>
Marigold Inc. incurred a net operating loss of $482,000 in 2017. The combined income for 2015 and 2016 was $360,000. The tax rate for all years is 20%. Marigold elects the carryback option. Assume that it is more likely than not that the entire net operating loss carryforward will not be realized in future years.
Prepare the journal entry at the end of 2017 to record carryback.
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