Question

Selected account balances from the adjusted trial balance for Olinda Corporation as of its calendar year-end December 31 follow. Debit Credit $ 15,500 $ 35,500 27,250 45,500 107,900 73,100 45,500 177,500 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 i. Loss from operating a discontinued segment (pretax) j. Gain on insurance recovery of tornado damage 1. 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 tax expense 9. Cost of goods sold 19,750 30, 620 1,013,500 53,500 17,500 41,500 25, 250 497,500 Assume that the company's Income tax rate is 30% for all items. Compute the tax effects and after-tax amounts of the three items labeled pretax 2a. What is the amount of Income from continuing operations before Income taxes? 2b. What is the amount of the Income tax expense? 2c. What is the amount of Income from continuing operations? Complete this question by entering your answers in the tabs below. Reg 2A Reg 2B Req 2c What is the amount of income from continuing operations before income taxes? Income from continuing operations before taxes S 19.750

Answer 1

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Answers are highlighted in yellow: Solution: Net Sales 1013500 Less: cost of goods sold 497500 Gross Profit 516000 Depreciation - Building 53500 Loss from settlement of lawsuit 25250 35500 Depreciation - Equipment Other operating expenses 107900 Loss on sale of equipment 27350 Interest income (expense) -15500 Gain from settlement of lawsuit -45 Total Nonoperating income (expense) 188500 327500 2A Income (loss) before taxes from continuing operations Income Taxes Net Income (loss) (327500*30%) 2B 98250 229250 20