Austin Inc. reported the following pretax income (loss) and related tax rates during the years 2011–2017.
Year Pretax Income (Loss) Tax Rate
2011 $60,000 40%
2012 $45,000 40%
2013 $10,000 30%
2014 $(140,000) 30%
2015 $30,000 30%
2016 $60,000 30%
2017 $40,000 35%
Pretax financial income (loss) and taxable income (loss) were the same for all years since Austin began business.
The tax rates from 2013–2017 were enacted in 2013.
INSTRUCTIONS: Prepare the journal entries for the years 2014-2016 to record income taxes payable (refundable), income tax expense (benefit), and the effects of the loss carryback and carryforward. Assume loss carryforward in the year immediately follows the loss.