Required information Problem 17-6AA Income statement computations and format LO
ID: 2520946 • Letter: R
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 1
Required:
1. Assume that the company’s income tax rate is 30% for all items. Compute the tax effects and after-tax amounts of the three items labeled pretax.
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?
Problem 17-6 Part 3
3. What is the total amount of after-tax income (loss) associated with the discontinued segment?
Problem 17-6 Part 4
4. What is the amount of net income for the year?
Debit Credit a. Interest revenue $ 14,300 b. Depreciation expense—Equipment. $ 34,300 c. Loss on sale of equipment 26,150 d. Accounts payable 44,300 e. Other operating expenses 106,700 f. Accumulated depreciation—Equipment 71,900 g. Gain from settlement of lawsuit 44,300 h. Accumulated depreciation—Buildings 175,100 i. Loss from operating a discontinued segment (pretax) 18,550 j. Gain on insurance recovery of tornado damage 29,420 k. Net sales 1,001,500 l. Depreciation expense—Buildings 52,300 m. Correction of overstatement of prior year’s sales (pretax) 16,300 n. Gain on sale of discontinued segment’s assets (pretax) 35,500 o. Loss from settlement of lawsuit 24,050 p. Income taxes expense ? q. Cost of goods sold 485,500Explanation / Answer
Pretax 30% Tax Effect After Tax Loss from operating a discontinued segment -18,550.00 -5,565.00 -24,115.00 Correction of overstatement of prior year’s sales 16,300.00 -4,890.00 11,410.00 Gain on sale of discontinued segment’s assets 35,500.00 10,650.00 46,150.00 2a. income from continuing operations before income taxes Loss from operating a discontinued segment 18,550.00 Gain on sale of discontinued segment’s assets 35,500.00 Income from continuing operations before income taxes 16,950.00 2b. What is the amount of the income taxes expense? Income taxes expense 1,08,351.00 Debit Interest revenue -14,300.00 Depreciation expense—Equipment. 34,300.00 Loss on sale of equipment 26,150.00 Other operating expenses 1,06,700.00 Gain from settlement of lawsuit -44,300.00 Gain on insurance recovery of tornado damage -29,420.00 Net sales -10,01,500.00 Depreciation expense—Buildings 52,300.00 Correction of overstatement of prior year’s sales (pretax) 16,300.00 Loss from settlement of lawsuit 24,050.00 Cost of goods sold 4,85,500.00 Profit from continuieng Opertions -3,44,220.00 Loss from operating a discontinued segment (pretax) 18,550.00 Gain on sale of discontinued segment’s assets (pretax) -35,500.00 Profit Before Tax -3,61,170.00 Income taxes expense 1,08,351.00 Net Income -2,52,819.00 2c. What is the amount of income from continuing operations? Income from continuing operations 2,40,954.00 Income from continuing operations before income taxes? 3,44,220.00 What is the total amount of after-tax income (loss) associated with the discontinued segment? Loss from operating a discontinued segment 18,550.00 Gain on sale of discontinued segment’s assets 35,500.00 Income from continuing operations before income taxes 16,950.00 Income Tax 5,085.00 Income from continuing operations after tax 11,865.00 What is the amount of net income for the year? Net Income -2,52,819.00
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