Problem 13-6AA Income statement computations and format LO A2 The following info
ID: 2520372 • Letter: P
Question
Problem 13-6AA 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, 2016, follow Credit S 14,000 Debit ? Interest revenue S 34,000 25,850 C. Loss on sale of equipment d. Accounts payable e. Other operating expenses 44,000 106,400 71,600 44,000 74,500 g. Gain from settlement of lawsurt i. Loss from operating a discontinued segment (pretax) j. Gain on insurance recovery of tornado damage k. Net sales 18,250 20,000 998,000 52,000 m. Correction of overstatement of prior years 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 16,000 23,250 482,500 34,000Explanation / Answer
Answer:
1) Tax effect and after tax effect
2.1. Amount of income for continuing operation before income taxes
2.2 Amount of income tax expens @30%= 99,600 i.e (332,000*30%)
2.3 Income from continuint operation after taxes=332,000-99,600=$232,400
3. After tax income/ (loss) associated with discontinued segment
4. Net income of the year
Pre tax tax effect after tax Loss from operating a discontinued segment $(18,250) $(5,475) $(12,775) correction of overstatement of prior year sales $(16,000) $(4,800) $(11,200) gain on sale of discontinued segment assets $34,000 $10,200 $23,800