Addison Corporation is currently going through a Chapter 11 bankruptcy. The comp

Question

Addison Corporation is currently going through a Chapter 11 bankruptcy. The company has the following account balances for the current year.

Debit Credit
Advertising expense $ 25,000
Cost of goods sold 212,000
Depreciation expense 23,000
Interest expense 5,000
Interest revenue $ 33,000
Loss on closing of branch as part of reorganization 110,000
Professional fees 72,000
Rent expense 17,000
Revenues 474,000
Salaries expense 71,000

Prepare an income statement for this organization. The effective tax rate is 25 percent (realization of any tax benefits is anticipated). (Negative amounts under "Reorganization items" should be indicated by a minus sign. All other amounts should be entered as positive.)

Explanation / Answer

Income statement for the year ended

Particulars Amount($) Amount($)

Revenue $474000

Cost of goods sold ($212000)

Gross profit $262000

Advertising expense ($25000)

Depreciation expense ($23000)

Interest expense ($5000)

Rent expense ($17000)

Salaries expense ($71000)

Income before organisation items and tax benefits $121000

Reorganisation item loss ($110000)

Professional fees ($72000)

Interest revenue $33000

Loss before income tax ($28000)

Income tax benefit $7000

Net loss ($21000).

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.