At Ruth Company, events and transactions during 2012 included the following. The

Question

At Ruth Company, events and transactions during 2012 included the following. The tax rate for all items is 30%.(1) Depreciation for 2010 was found to be understated by $60,000.(2) A strike by the employees of a supplier resulted in a loss of $50,000.(3) The inventory at December 31, 2010 was overstated by $80,000.(4) A flood destroyed a building that had a book value of $1,000,000. Floods are very uncommon in that area.The effect of these events and transactions on 2012 income from continuing operations net of tax would be

Answer

($35,000).

($833,000).

($77,000).

($133,000).

Explanation / Answer

Hi,

Please find the answer as follows:

Option A (35000) is the correct answer.

Notes:

Strike by Employees = 50000 - .30*50000 = 35000

Thanks.

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