Help with the steps/breakdown on the below problem. Income statement computation
ID: 2464749 • Letter: H
Question
Help with the steps/breakdown on the below problem.
Income statement computations and format LO A2
Selected account balances from the adjusted trial balance for Olinda Corporation as of its calendar year end December 31, 2013, follow.
Debit Credit
a. Interest revenue $14,400
b. Depreciation expense—Equipment. $34,400
c. Loss on sale of equipment 26,250
d. Accounts payable 44,400
e. Other operating expenses 106,800
f. Accumulated depreciation—Equipment 72,000
g. Gain from settlement of lawsuit 44,400
h. Accumulated depreciation—Buildings 175,300
i. Loss from operating a discontinued segment (pretax) 18,650
j. Gain on insurance recovery of tornado damage (pretax and extraordinary) 29,520
k. Net sales 1,002,500
l. Depreciation expense—Buildings 52,400
m. Correction of overstatement of prior year’s sales (pretax) 16,400
n. Gain on sale of discontinued segment’s assets (pretax) 36,000
o. Loss from settlement of lawsuit 24,150
p. Income taxes expense ?
q. Cost of goods sold 486,500
1. Assume that the company’s income tax rate is 40% for all items. Compute the tax effects and after-tax amounts of the four items labeled pretax.
40% Tax
Pretax
Effect
After-Tax
Loss from operating a discounted segment
Gain on insurance recovery of tornado damage
Correction of overstatement of prior year's sales
Gain on sale of discounted segment's assets
2.1 What is the amount of income from continuing operations before income taxes?
Income from continuing operations before taxes
?
2.2 What is the amount of the income taxes expense?
What is the amount of the income taxes expense
?
2.3 What is the amount of income from continuing operations?
Income from continuing operations after taxes
?
3. What is the total amount of after-tax income (loss) associated with the discontinued segment?
After-tax income from discounted segment
?
4. What is the amount of income (loss) before the extraordinary items?
Income before extraordinary items
?
5. What is the amount of net income for the year?
Net income
?
40% Tax
Pretax
Effect
After-Tax
Loss from operating a discounted segment
Gain on insurance recovery of tornado damage
Correction of overstatement of prior year's sales
Gain on sale of discounted segment's assets
Explanation / Answer
Ans 1.
Ans 2.
40% Tax Pretax Effect After-Tax Loss from operating a discounted segment $18,650 0 ($18,650) Gain on insurance recovery of tornado damage $29,520 $11,808.0 $17,712.0 Correction of overstatement of prior year's sales $16,400 $6,560.0 ($6,560.0) Gain on sale of discounted segment's assets $36,000 $14,400.0 $21,600.0Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.