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Selected account balances from the adjusted trial balance for Olinda Corporation as of its calendar year-end December 31, 2017, follow.

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

Debit Credit a. Interest revenue $ 14,800 b. Depreciation expense—Equipment. $ 34,800 c. Loss on sale of equipment 26,650 d. Accounts payable 44,800 e. Other operating expenses 107,200 f. Accumulated depreciation—Equipment 72,400 g. Gain from settlement of lawsuit 44,800 h. Accumulated depreciation—Buildings 176,100 i. Loss from operating a discontinued segment (pretax) 19,050 j. Gain on insurance recovery of tornado damage 29,920 k. Net sales 1,006,500 l. Depreciation expense—Buildings 52,800 m. Correction of overstatement of prior year’s sales (pretax) 16,800 n. Gain on sale of discontinued segment’s assets (pretax) 38,000 o. Loss from settlement of lawsuit 24,550 p. Income taxes expense ? q. Cost of goods sold 490,500

Explanation / Answer

2a). Amount of income from continuing operations before income taxes

2b). Amount of the income taxes expense

Amount of the income taxes expense = 329,600 x 30% = $98,880

2c). Amount of income from continuing operations

Amount of income from continuing operations = $329,600 - $98,880 = $230,720

3) Amount of net income for the year

Interest revenue 14,800 Add: Gain from settlement of lawsuit 44,800 Add: Net sales 1,006,500 Total Revenue 1,066,100 less: Cost of goods sold 490,500 Gross Income 575600 Less: Depreciation Equipment 34,800 Less: Loss on sale of equipment 26,650 Less: Other operating expenses 107,200 Less: Depreciation expense—Buildings 52,800 Less: Loss from settlement of lawsuit 24,550 Income from continuing operations before income taxes 329,600

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