Problem 3 Presented below are selected ledger accounts of Tucker Corporation as

Question

Problem 3 Presented below are selected ledger accounts of Tucker Corporation as of December 31, 2017. Cash $ 125,000 Administrative expenses 250,000 Selling expenses 200,000 Net sales 1,350,000 Cost of goods sold 525,000 Cash dividends declared (2017) 50,000 Cash dividends paid (2017) 37,500 Discontinued operations (loss before income taxes) 100,000 Depreciation expense, not recorded in 2016 75,000 Retained earnings, December 31, 2016 225,000 Effective tax rate 30% Instructions: (a) Compute net income for 2017. (b) Prepare a partial income statement beginning with income from continuing operations before income tax, and including appropriate earnings per share information. Assume 10,000 shares of common stock were outstanding during 2017.

Explanation / Answer

Solution:

From the given data we need to find the values for given requirements:

Answer (a): The net income for 2017:

Answer (b): The partial income statement:

Accounts and details Amount ($) Net sales 1,350,000 Less: Cost of goods sold (525,000) Gross profit 825,000 Less: Administrative expenses (250,000) Less: Selling expenses (200,000) Income before tax 375,000 Income tax (375,000 * 30%) (112,500) Income from continuing operation 262,500 Discontinued operation loss (100,000 * 70%) (70,000) Net income 192,500

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