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Problem:

Assume that last year (2011) A&A products had a net operating loss of 50,000 and for this problem A&A products reported tax expense for 2012 of 70,000. Also assume that in 2010 A&A products had income of 10,000 and a tax rate of 20% (ignore any earlier years). This year 2012 A&A products reported net income of 70,000 and tax rate of 20%. Prepare the entry that A&A products should have made in 2011.

Required:

Question: Prepare an entry for 2012 recording the effect on A&A products books for 2011 NOL.

Note: Please provide equation and explain comprehensively and give step by step solution.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91165057

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