Question

Pina Colada Inc. reported the following accounting income (loss) and related tax rates during the years 2015 to 2021:

		Accounting				Tax
Year		Income (Loss)				Rate
2015		$70,000				25%
2016		25,000				25%
2017		64,000				25%
2018		76,000				30%
2019		(200,000	)			35%
2020		73,000				30%
2021		95,000				25%

Accounting income (loss) and taxable income (loss) were the same for all years since Pina Colada began business. The tax rates from 2018 to 2021 were enacted in 2018.

Assume Pina Colada Inc. follows ASPE for all parts of this question, except when asked about the effect of reporting under IFRS in part (b).

Part 1

Prepare the journal entries to record income taxes for the years 2019 to 2021. Assume that Pina Colada uses the carryback provision where possible and expects to realize the benefits of any loss carryforward in the year that immediately follows the loss year. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Year	Account Titles and Explanation	Debit	Credit
2019	Future Tax AssetIncome Tax Receivable-2018No EntryAllowance to Reduce Future Tax Asset to Expected Realizable ValueIncome Tax Receivable-2016Income Tax PayableCurrent Tax BenefitFuture Tax ExpenseCurrent Tax ExpenseFuture Tax BenefitIncome Tax Receivable-2017
	Income Tax Receivable-2018Income Tax Receivable-2016Current Tax ExpenseIncome Tax Receivable-2017Current Tax BenefitFuture Tax ExpenseNo EntryFuture Tax AssetIncome Tax PayableAllowance to Reduce Future Tax Asset to Expected Realizable ValueFuture Tax Benefit
	Income Tax Receivable-2016Current Tax BenefitFuture Tax ExpenseAllowance to Reduce Future Tax Asset to Expected Realizable ValueIncome Tax Receivable-2017Current Tax ExpenseFuture Tax AssetNo EntryIncome Tax PayableIncome Tax Receivable-2018Future Tax Benefit
	Future Tax AssetIncome Tax Receivable-2017Current Tax BenefitIncome Tax PayableAllowance to Reduce Future Tax Asset to Expected Realizable ValueCurrent Tax ExpenseIncome Tax Receivable-2018Future Tax BenefitFuture Tax ExpenseNo EntryIncome Tax Receivable-2016
	(To record benefit from loss carryback)
2019	Income Tax Receivable-2017Future Tax BenefitIncome Tax Receivable-2018Future Tax AssetAllowance to Reduce Future Tax Asset to Expected Realizable ValueNo EntryCurrent Tax ExpenseIncome Tax Receivable-2016Future Tax ExpenseIncome Tax PayableCurrent Tax Benefit
	Future Tax ExpenseIncome Tax Receivable-2016Current Tax ExpenseFuture Tax AssetFuture Tax BenefitAllowance to Reduce Future Tax Asset to Expected Realizable ValueIncome Tax Receivable-2018No EntryCurrent Tax BenefitIncome Tax Receivable-2017Income Tax Payable
	(To record future benefit from loss carryforward)
2020	Income Tax Receivable-2016Income Tax Receivable-2017Income Tax PayableCurrent Tax ExpenseFuture Tax BenefitFuture Tax ExpenseIncome Tax Receivable-2018Allowance to Reduce Future Tax Asset to Expected Realizable ValueCurrent Tax BenefitFuture Tax AssetNo Entry
	Current Tax BenefitAllowance to Reduce Future Tax Asset to Expected Realizable ValueIncome Tax Receivable-2016Income Tax Receivable-2017No EntryIncome Tax PayableFuture Tax ExpenseIncome Tax Receivable-2018Current Tax ExpenseFuture Tax BenefitFuture Tax Asset
	(To record current tax expense)
2020	No EntryFuture Tax ExpenseFuture Tax AssetIncome Tax Receivable-2017Income Tax PayableCurrent Tax ExpenseCurrent Tax BenefitFuture Tax BenefitAllowance to Reduce Future Tax Asset to Expected Realizable ValueIncome Tax Receivable-2016Income Tax Receivable-2018
	Future Tax ExpenseIncome Tax Receivable-2016Current Tax BenefitIncome Tax Receivable-2018Current Tax ExpenseNo EntryFuture Tax AssetIncome Tax Receivable-2017Allowance to Reduce Future Tax Asset to Expected Realizable ValueIncome Tax PayableFuture Tax Benefit
	(To record future tax expense)
2021	Income Tax PayableIncome Tax Receivable-2017Future Tax AssetIncome Tax Receivable-2018Current Tax BenefitCurrent Tax ExpenseAllowance to Reduce Future Tax Asset to Expected Realizable ValueFuture Tax ExpenseNo EntryIncome Tax Receivable-2016Future Tax Benefit
	Income Tax Receivable-2016Future Tax ExpenseAllowance to Reduce Future Tax Asset to Expected Realizable ValueFuture Tax BenefitCurrent Tax BenefitCurrent Tax ExpenseIncome Tax PayableIncome Tax Receivable-2017No EntryFuture Tax AssetIncome Tax Receivable-2018
	(To record income taxes)

eTextbook and Media

Save for Later

Attempts: 0 of 2 used

Submit Answer

Part 2

The parts of this question must be completed in order. This part will be available when you complete the part above.

Part 3

The parts of this question must be completed in order. This part will be available when you complete the part above.

Part 4

The parts of this question must be completed in order. This part will be available when you complete the part above.

Part 5

The parts of this question must be completed in order. This part will be available when you complete the part above.

Part 6

The parts of this question must be completed in order. This part will be available when you complete the part above.