1. What is the amount of income from continuing operations before income taxes?

Question

1. What is the amount of income from continuing operations before income taxes?

2. What is the amount of the income taxes expense?

3. What is the amount of income from continuing operations?

4. What is the total amount of after-tax income (loss) associated with the discontinued segment?

5. What is the amount of net income for the year?

Tax Rate is 40% on all items

Required information 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 Credit $15,700 Debit 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 1. 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 $ 35,700 27,550 45,700 108,100 73,300 45,700 177,900 19,950 30,820 1,015,500 53,700 17,700 25,450 499,500 42,500

Explanation / Answer

Requirement 1 Sales Revenue        10,15,500 interest revenue              15,700 Gain from settlement of lawsuit              45,700 Total revenues and gains        10,76,900 Cost of goods sold        4,99,500 Depreciation expense -Equipment            35,700 Depreciation expense - building            53,700 Other operating expenses        1,08,100 Loss on the sale of eqipment            27,550 Loss from settlement of lawsuit            25,450 Total Expenses           7,50,000 Income from continued operations before taxes           3,26,900 Requirement 2 Income taxes Expense (326,900 X40%)           1,30,760 Requirement 3 Income from continued operations after taxes (326,900-130,760)           1,96,140 Requirement 4 Loss from operating a discontinued segment(after tax) (19,950X60%)             -11,970 Gain on sale of discontinued segment assets (after tax) (42500X60%)              25,500 Income from discontinud segment              13,530 Requirement 5 Income before extraordinary items (196,140+13,530)           2,09,670 Extraordinary items: Gain on insurance recovery of tonado damage (net of tax) (30820X60%)              18,492 Net income           2,28,162

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