The accountant at Wade Corporation has compiled the following pretax information
ID: 2333840 • Letter: T
Question
The accountant at Wade Corporation has compiled the following pretax information pertaining to the 2017 fiscal year. All pertinent information needed to create the 2017 consolidated income statement and balance sheet are included below:
Net Sales = $254,000
Total assets = $143,100
Gross Profit = $113,000
Operating Loss from Discontinued Component held-for-sale = $18,000
Restructuring charges/loss=$10,200
Common stock=$20,000
Dividends=$8,000
Total operating expenses = $48,500
Total liabilities = $58,800
Beginning retaine dearnings=$45,000
Interest revenue = $5,700
Tax rate=35%
a) What amount would Wade Corporation present as its “Income from Continuing Operations after tax” for2017?
How do i get COGS if there no beg. inventory, purchases, ending inventory? How do I get Income before TAX? How do i get the income to minority share holders?
b) Assume that Wade Corporation owns 75% of the stock of ABC, Inc. and ABC had net income during the year of $8,400. The revenue and expense figures for ABC are included in the consolidated informationpresented above. What amount would Wade Corporation show as “Net income attributable to the stockholders of Wade Corporation” in 2017?
Explanation / Answer
A) Income from Continuing Operations after tax = $41,925
B) Calculation of COGS = Net Sales - Gross Profit (Since, Gross profit = Net sales - COGS)
C) Income Before Tax = $64,500 (As per above calculation)
Income Statement Net Sales $254,000 Less: COGS (Net Sales -Gross Profit) $141,000 Gross Profit $113,000 Less: Operating Expenses $48,500 Profit Before Tax $64,500 Less: Tax(35%) $22,575 Net Profit / Income After Tax $41,925
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