7) Bailey Corporations tax rate is 40%. In addition, the company had the followi

Question

7) Bailey Corporations 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

Other losses and expenses Extraordinary loss Other gains and revenues Discontinued operations 1. Interest revenue during the year is $30,000 30,000 2. Interest expense during the year is $20,500. 20,500 3. Rent revenue during the year is $63,000. 63,000 4. Loss on sale of machinery during the year is $34,000. 34,000 5. Pretax loss from discontinued operations is $115,000. 1,15,000 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. 1,45,000 Income before tax 54500 145000 93000 115000 Tax 40% 21800 58000 37200 46000 Income after tax 32700 87000 55800 69000

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