2015 income by $55,530 and decrease 2016 income by $21,980 before taxes. The FIF

Question

2015 income by $55,530 and decrease 2016 income by $21,980 before taxes. The FIFO method has been used for 2017. The Prepare an income statement for the year 2017 starting with income from continuing operations before taxes. Compute earnings pe face of the income statement. Common shares outstanding for the year are 128,790 shares. (Assume a tax rate of 30% on all items Round earnings per share to 2 decimal places, e.g. 1.48 and all other answers to 0 decimal places,e.g. 5,275 BLOSSOM INC. Income Statement (Partial) For the Year Ended December 31, 2017 Income From Continuing Operations Before Income Tax 86291 Income Tax Expense 226 Income From Continuing Operations 636050 Loss From Disposal of Recreational Division 119180 Less , I Applicable Income Tax Reduction 35754 83426 Net Income/ (Loss) acer

Explanation / Answer

Computation of income from continued operations before taxes As previously stated 815700 Loss on sale of securities -61100 Gain on proceeds of life insurance policy ($153,500 – $46,790) 106710 Flood loss -96000 Error in computation of depreciation As computed ($57,600 ÷ 6) = 9600 9600 Corrected (($57,600 – $9,600) ÷ 6) = (8000) -8000 1600 As restated 766910 Computation of income tax Income from continuing operations before taxes 766910 Nontaxable income (gain on life insurance) -106710 Taxable income 660200 Tax rate 30% Income tax expense 198060 Income from continuing operations before taxes 766910 Income Tax Expenses 198060 Income from continuing operations 568850

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