Red Lantern Company Experienced a Net Operating Loss of $654,000

question 50

Essay

Red Lantern Company experienced a net operating loss of $654,000 in 2018. The company reported taxable income of $543,000 in 2016 and $321,000 in 2017. The tax rate for all years is 35%. Assuming the company uses the carryback provisions for the net operating loss, prepare the following for the year of the loss:
a) The necessary journal entry to record the NOL carryback.
b) A partial income statement beginning with the net loss before benefit.

---

Definitions:

Hematologic Test

Laboratory analyses performed on blood samples to diagnose blood disorders or diseases.

Whole Blood

The total volume of plasma and formed elements, or blood in which the elements have not been separated by coagulation or centrifugation.

Blood Cells

Cells that circulate in the blood, comprising red blood cells, white blood cells, and platelets, each serving essential functions in the body.

Pathogenic Organisms

Microorganisms that cause disease in their host, including viruses, bacteria, fungi, and parasites.