Required IHTOPmatioh Problem 17-6AA Income statement computations and format LO

Question

Required IHTOPmatioh 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 Debit Credit $ 14,200 a. Interest revenue b. Depreciation expense-Equipment c. Loss on sale of equipment d. Accounts payable e. Other operating expenses f. Accumulated depreciation-Equipment g. Gain from settlement of lawsuit h. Accumulated depreciation-Buildings i. Loss from operating a discontinued segment (pretax) j. Gain on insurance recovery of tornado damage k. Net sales 1. Depreciation expense-Buildings m. Correction of overstatement of prior year's sales (pretax) n. Gain on sale of discontinued segment's assets (pretax) o. Loss from settlement of lawsuit p. Income taxes expense q. Cost of goods sold $ 34,200 26,050 44, 200 106,600 71,800 44,200 174,900 18,450 29,320 1,000,500 52,200 16,200 23,950 484,500 35,000

Explanation / Answer

Note: The income tax rate is not provided in the question. We have assumed a 35% tax rate for questions 2b and 2C. The actual answer would depend upon the tax rate provided in the question.

Net Sales       10,00,500 Less: Cost of Goods Sold        -4,84,500 Gross profit         5,16,000 Less: Other Operating Expenses        -1,06,600 Less: Loss on Sale of Equipment           -26,050 Operating Income before Interest, Taxes and Depreication         3,83,350 Less: Depreciation Expense (Buildings & Equipment)           -86,400 Operating Income before Interest and Taxes         2,96,950 Interest Revenue            14,200 Operating Income before Interest and Taxes and Non-recurring items         3,11,150 Gain on Insurance 29320 Gain from Settlement of Lawsuit 44200 Loss from Settlement of Lawsuit -23950 Prior Period Correction -16200 Income From Continuing Operations before tax         3,44,520 Less: Income Tax Expense (35% tax rate assumed)        -1,20,582 Income From Continuing Operations after tax         2,23,938 Loss from discontinued operations -18450 Gain on sale of discountinued operations 35000

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