Question

Marigold Inc. incurred a net operating loss of $575,700 in 2020. Combined income for 2017, 2018, and 2019 was $452,600. The tax rate for all years is 30%. Assume that it is more likely than not that the entire tax loss carryforward will not be realized in future years. Assume that Marigold earns taxable income of $24,000 in 2021 and that at the end of 2021 there is still too much uncertainty to recognize a deferred tax asset. Prepare the journal entries that are necessary at the end of 2021 assuming that Marigold does not use a valuation allowance account. (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 for the amounts.) Year Account Titles and Explanation Debit Cre 2021 (To record current tax expense) 2021 (To record current tax benefit)

Answer 1

Preparation of all the necessary journal entries, including the end-of-month closing entry to record cost of goods sold.

Prepare the journal entries ?

Jan 4

Dr Accounts Receivable 632

Cr Sales Revenue 632

Jan 11

Dr Purchases 870

Cr Accounts payable 870

Jan 13

Dr Accounts Receivable 1,035

Cr Sales Revenue 1,035

Jan 20

Dr Purchases 972

Cr Accounts payable 972

Jan 27

Dr Accounts receivable 1,070

Cr Sales Revenue 1,070

jan. 31

Dr Inventory $660

Dr Cost of Goods Sold $1,702

Cr Purchases $1,842

Cr Inventory $520

Jan 4

Dr Accounts Receivable 632

Cr Sales Revenue(79*8) 632

(to record Cost of Goods Sold)

Jan 11

Dr Purchases (145*6) 870

Cr Accounts payable 870

( to record the purchase)

Jan 13

Dr Accounts Receivable 1,035

Cr Sales Revenue(115*9) 1,035

(to record the cost of Goods Sold)

Jan 20

Dr Purchases(162*6) 972

Cr Accounts payable 972

( to record the purchase)

Jan 27

Dr Accounts receivable 1,070

Cr Sales Revenue(107*10) 1,070

( to record the cost of Goods Sold)

Jan. 31

Dr Inventory $660

($6* 110)

Dr Cost of Goods Sold $1,702

($520+$1,842-$660)

Cr Purchases $1,842

($870 + $972)

Cr Inventory $520

(104* $5)

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