Required information Problem 17-6AA Income statement computations and format LO

Question

Required information

Problem 17-6AA Income statement computations and format LO A2

[The following information applies to the questions displayed below.]

Selected account balances from the adjusted trial balance for Olinda Corporation as of its calendar year-end December 31, 2017, follow.

Problem 17-6 Part 2

2a. What is the amount of income from continuing operations before income taxes?
2b. What is the amount of the income taxes expense?
2c. What is the amount of income from continuing operations?

What is the amount of income from continuing operations before income taxes?

What is the amount of the income taxes expense?

What is the amount of income from continuing operations?

Required information

Problem 17-6AA Income statement computations and format LO A2

[The following information applies to the questions displayed below.]

Selected account balances from the adjusted trial balance for Olinda Corporation as of its calendar year-end December 31, 2017, follow.

Problem 17-6 Part 3

3. What is the total amount of after-tax income (loss) associated with the discontinued segment?

Required information

Problem 17-6AA Income statement computations and format LO A2

[The following information applies to the questions displayed below.]

Selected account balances from the adjusted trial balance for Olinda Corporation as of its calendar year-end December 31, 2017, follow.

Problem 17-6 Part 4

4. What is the amount of net income for the year?

Debit Credit a. Interest revenue $ 14,500 b. Depreciation expense—Equipment. $ 34,500 c. Loss on sale of equipment 26,350 d. Accounts payable 44,500 e. Other operating expenses 106,900 f. Accumulated depreciation—Equipment 72,100 g. Gain from settlement of lawsuit 44,500 h. Accumulated depreciation—Buildings 175,500 i. Loss from operating a discontinued segment (pretax) 18,750 j. Gain on insurance recovery of tornado damage 29,620 k. Net sales 1,003,500 l. Depreciation expense—Buildings 52,500 m. Correction of overstatement of prior year’s sales (pretax) 16,500 n. Gain on sale of discontinued segment’s assets (pretax) 36,500 o. Loss from settlement of lawsuit 24,250 p. Income taxes expense ? q. Cost of goods sold 487,500

Explanation / Answer

Solution:

2a.

2b. Amount of income tax expense = $292,900 x 30% = $87,870

2c. Amount of income from continuing operations = $292,900 - $87,870 = $205,030

3. Loss from operating a discontinued segment (after- tax) (18,750)

Gain on sale of discontinued segment (after-tax) 36,500

Income from discontinued segment 17,750

4.

Income before extraordinary item $222,780 ($205,030 + $17,750)

Gain on insurance recovery of tornado damage (after-tax) $29,620

Net Income $252,400

Net Sales 1,003,500 Interest Revenue 14,500 Gain from setting lawsuit 44,500 Total revenue and gains 1062500 Cost of goods sold 487,500 Depreciation expense - Equipment 72,100 Depreciation expense - Buildings 52,500 Other operating expenses 106,900 Loss on sale of equipment 26,350 Loss from selling lawsuit 24,250 Total expenses 769,600 Income from continuing operating before taxes 292,900

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