Answer
1. The entries for the loss carryback shall be;
Dr (Debit) Tax refund receivable with 140,000
Cr Loss carryback account with 140,000
2. the entries for the loss carry forward shall be;
Dr (Debit) Deferred tax asset with 60,000
Cr (Credit) Loss carryforward with 60,000
Work Step by Step
1. Tax refund receivable (Carryback);
350,000*40% = 140,000
2. Tax refund receivable (Carryforward)
(500,000-350,000) *40% = 60,000
