7) Bailey Corporation\'s tax rate is 40%. In addition, the company had the follo

Question

7) Bailey Corporation's tax rate is 40%. In addition, the company had the following transactions during the year 1. Interest revenue during the year is $30,000 2. Interest expense during the year is $20,500. 3. Rent revenue during the year is $63,000. 4. Loss on sale of machinery during the year is $34,000. 5. Pretax loss from discontinued operations is $115,000. 6. A hurricane destroyed a building used by the corporation in its manufacturing operations. The company is located in an area where hurricanes are rare. The pre-tax loss is $145,000. Compute the following items: a. Other losses and expenses b. Extraordinary loss c. Other gains and revenues d. Discontinued operations

Explanation / Answer

1. Other losses and expenses includes interest expenses, loss on sale of machinery and loss from discontinued operations = $ 169500

2. Loss due to hurricane =$ 145000

3. Other gains and revenues include interest and rent revenues =$ 93000

4. Dis continued operations=115000

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