Question

Selected account balances from the adjusted trial balance for Olinda Corporation as of Its calendar year-end December 31 follow. Debit Credit Interest revenue 15,500 $ 35,500 b. Depreciation expense-Equipment Loss on sale of equipment d. Accounts payable Other operating expenses £. Accumulated depreciation-Equipment g. Gain from settlement of lawsuit h. Accumulated depreciation-Buildings i. Loss from operating a discontinued segment (pretax) i. Gain on 27,350 C. 45,500 107,900 73,100 45,500 177,500 19,750 insurance recovery of tornado damage 30, 620 k. Net sales 1,013,500 1. Depreciation expense-Buildings Correction of overstatement of prior year's sales 53,500 (pretax) 17,500 m. 41,500 Gain on =ale of discontinued segment'= 2ssets (pretax) . Loss from settlement of lawsuit Р. Income tax exрепsе 25,250 497,500 9. Созt of дoods sold 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 continulng operations before Income taxes? 2b. What Is the amount of the Income tax expense? 2c. What Is the amount of Income from continulng operations? Complete this question by entering your answers in the tabs below. Req 2B Reg 2A Req 20 What is the amount of income from continuing operations before income taxes? Income from continuing operations before taxes 19,750

Answer 1

1. Calculation of income from continuing operations before tax,
   1. As already given the answer is 19,750 which is correct, based on the simple concept of adding all types of incomes and minus all types of expenses.
2. Calculation of amount of income tax expense,
   1. 19,750 x 30% = 5,925.
3. Calculation of income from continuing operations,
   1. 19,750 - 5,925 = 13,825.