Wynn Sheet Metal reported an operating loss of $172,000 for financial reporting and tax purposes in 2018. The

enacted tax rate is 40%. Taxable income, tax rates, and income taxes paid in Wynn’s first four years of operation were as follows:

  Taxable

Income   Tax

Rates   Income Taxes

Paid 2014 $ 66,000   30 %   $ 19,800   2015   76,000   30       22,800   2016   86,000   40       34,400   2017   66,000   45       29,700  

Required:

1. Complete the following table given below and prepare the journal entry to recognize the income tax benefit of the operating loss. Wynn elects the carryback option.

2. Show the lower portion of the 2018 income statement that reports the income tax benefit of the operating loss.

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