44) The following data include all the elements from Tuche Millinery income stat

Question

44) The following data include all the elements from Tuche Millinery income statement Administrative Expense Cost of Goods Sold Gain on Sale of Securities $231 263 41 57 Income Tax Expense Loss on Discontinued Operations 38 Loss on Disposal of Equipment86 Revenue Selling Expense 865 124 What is the amount of income from continuing operations for Tuche Millinery? A) $247 B) $302 C) $194 D) $145 45) The percentage-of-completion method recognizes gross profit A) over the life of the contract B) at the end of the contract C) at the beginning of the contract D) one year after completion of contract 46) What is the normal journal entry for recording bad debt expense? A) debit Bad Debt Expense, credit Allowance for Uncollectible Accounts B) debit Allowance for Uncollectible Accounts, credit Bad Debt Expense C) debit Bad Debt Expense, credit Accounts Receivable D) debit Accounts Receivable, credit Bad Debt Expense 47) Which of the following is considered to be cash (not a cash equivalent)? A) treasury bill B) money market fund C) certificate of deposit D) money order Anakwe-Intermediate I, Fall 2017 Final Exam 121Page Anakwe-Intern

Explanation / Answer

Ans 44. Lets build the income statement.

Revenue = +865

(-) Cost of Goods Sold = - 263

Gross Profit = +602

(-) Administrative expense = -231

(-) Selling Expense = -124

EBITDA = 247

Depreciation = 0

EBIT = 247

(+) Gain on sale of securities = + 41

(-) Loss on disposal of equipment = - 86

EBT = 202

(-) Income tax = - 57

PAT from continuing operations = 145

Loss from discontinuing operation = -38

PAT from continuing and discontinuing operations = 107

Answer is D.

Note: Loss or gain from discontinuing operation is below the line item

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