Question

Problem 4-7 Cullumber Corp. has 149,910 shares of common stock outstanding. In 2017, the company reports income from continuing operations before income tax of $1,221,100 Additional transactions not considered in the $1,221,100 are as follows. 1. In 2017, Cullumber Corp. sold equipment for $36,200. The machine had originally cost $81,900 and had accumulated depreciation of $34,800. The gain or loss is 2. The company discontinued operations of one of its subsidiaries during the current year at a loss of $191,500 before taxes. Assume that this transaction meets the considered non-recurring criteria for discontinued operations. The loss from operations of the discontinued subsidiary was $92,300 before taxes; the loss from disposal of the subsidiary was $99,200 before taxes. An internal audit discovered that amortization of intangible assets was understated by $39,200 (net of tax) in a prior period. The amount was charged against retained earnings The company had a non-recurring gain of $125,500 on the condemnation of some of its property (included in the $1,221,100) 3. 4. Analyze the above information and prepare an income statement for the year 2017, starting with income from continuing operations before income tax. Compute earnings per share as it should be shown on the face of the income statement. (Assume a total effective tax rate of 38% on all items, unless otherwise indicated.) (Round earnings per share to 2 decimal places, e.g. 1.47.) CULLUMBER CORP Income Statement (Partial) Income From Continuing Operations Before Income Tax Income Tax Expense Income From Continuing Operations Discontinued Operations Loss from Operations of Discontinued SubsidiaryIncome Tax Expense Income From Continuing Operations Discontinued Operations Loss from Operations of Discontinued Subsidiary Less Applicable Income Tax Reduction Income Tax Expense Gain on Condemnation Net Income/(Loss)

0 0
Add a comment Improve this question Transcribed image text
Answer #1

Solution :-

Income statement :-

CULLUMBER CORP.

INCOME STATEMENT (PARTIAL)

FOR THE YEAR ENDED 2017

Income from continuing operations before tax

= $1,221,100 - [ 81,900 - 34,800 -36,200 ]

= $1,221,100 - $10,900

= $1,210,200

Income Tax

= $1,210,200 * 38%

= $459,876

Income from continuing operations

= $1,210,200 - $459,876

= $750,324

Discontinued Operations :
Loss from operations of discontinued subsidiary

$92,300

Applicable income tax reduction

= $92,300 * 38%

= $35,074

= $92,300 - $35,074

= $57,226

Loss from disposal of subsidiary

$99,200

Applicable income tax reduction

= $99,200 * 38%

= $37,696

= $99,200 - $37,696

= $61,504

Loss from discontinued operations (net of tax)

= $57,226 + $61,504

= $118,730

Income before extraordinary item

= $750,324 - $118,730

= $631,594

Extraordinary Item:
Gain on condemnation $125,500
Applicable tax

= 125,500 * 38%

= $47,690

Extraordinary gain ( net of tax )

= $125,500 -  $47,690

= $77,810

Net Income

= $631,594 + $77,810

= $709,404

Per Share of Common Stock:
Income from continuing operations

= $750,324 / 149,910 shares

= $5.01

Loss from discontinued operations (net of tax)

= $118,730 /149,910 shares

= $0.82

Income before extraordinary item

= $631,594 / 149,910 shares

= $4.21

Extraordinary Gain (net of tax)

= $77,810 / 149,910 shares

= $0.512

Net Income

= $709,404 / 149,910 shares

= $4.73

Add a comment
Know the answer?
Add Answer to:
Problem 4-7 Cullumber Corp. has 149,910 shares of common stock outstanding. In 2017, the company reports...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • Your answer is partially correct. Try again. Cullumber Corp. has 149,910 shares of common stock outstanding....

    Your answer is partially correct. Try again. Cullumber Corp. has 149,910 shares of common stock outstanding. In 2017, the company reports income from continuing operations before income tax of $1,221,100. Additional transactions not considered in the $1,221,100 are as follows. 1. In 2017, Cullumber Corp. sold equipment for $36,200. The machine had originally cost $81,900 and had accumulated depreciation of $34,800. The gain or loss is considered non-recurring. The company discontinued operations of one of its subsidiaries during the current...

  • Your answer is partially correct. Try agairn. Cullumber Corp. has 149,910 shares of common stock outstanding....

    Your answer is partially correct. Try agairn. Cullumber Corp. has 149,910 shares of common stock outstanding. In 2017, the company reports income from continuing operations before income tax of $1,221,100. Additional transactions not considered in the $1,221,100 are as follows. 1. In 2017, Cullumber Corp. sold equipment for $36,200. The machine had originally cost $81,900 and had accumulated depreciation of $34,800. The gain or loss is considered non-recurring 2. The company discontinued operations of one of its subsidiaries during the...

  • 1. In 2017, Cullumber Corp. sold equipment for $36,200. The machine had originally cost $81,900 and...

    1. In 2017, Cullumber Corp. sold equipment for $36,200. The machine had originally cost $81,900 and had accumulated depreciation of $34,800. The gain or loss is considered non-recurring. 2. The company discontinued operations of one of its subsidiaries during the current year at a loss of $191,500 before taxes. Assume that this transaction meets the criteria for discontinued operations. 3. An internal audit discovered that amortization of intangible assets was understated by $39,200 (net of tax) in a prior period....

  • Wade Corp. has 150,000 shares of common stock outstanding. In 2017, the company reports income from...

    Wade Corp. has 150,000 shares of common stock outstanding. In 2017, the company reports income from continuing operations before income tax of $1,210,000. Additional transactions not considered in the $1,210,000 are as 1. In 2017, Wade Corp. sold equipment for $40,000. The machine had originally cost $80,000 and had accumulated depreciation of $30,000. The gain or loss is considered non-recurring. 2. The company discontinued operations of one of its subsidiaries during the current year at a loss of $190,000 before...

  • Please help Problem 4-7 Bridgeport Corp. has 150,240 shares of common stock outstanding. In 2017, the...

    Please help Problem 4-7 Bridgeport Corp. has 150,240 shares of common stock outstanding. In 2017, the company reports income from continuing operations before income tax of $1,210,400. Additional transactions not considered in the $1,210,400 are as follows In 2017, Bridgeport Corp. sold equipment for $38,300. The machine had originally cost $83,600 and had accumulated depreciation of $31,900. The gain or loss is considered non-recurring. 1. The company discontinued operations criteria for discontinued operations. The loss from operations of the discontinued...

  • Coronado Corp. has 150,120 shares of common stock outstanding. In 2020, the company reports income from...

    Coronado Corp. has 150,120 shares of common stock outstanding. In 2020, the company reports income from continuing operations before income tax of $1,230,000. Additional transactions not considered in the $1,230,000 are as follows. 1. In 2020, Coronado Corp. sold equipment for $35,700. The machine had originally cost $83,500 and had accumulated depreciation of $31,500. The gain or loss is considered non-recurring. 2. The company discontinued operations of one of its subsidiaries during the current year at a loss of $195,100...

  • 1. Concord Corp. has 150,240 shares of common stock outstanding. In 2020, the company reports income...

    1. Concord Corp. has 150,240 shares of common stock outstanding. In 2020, the company reports income from continuing operations before income tax of $1.240,000. Additional transactions not considered in the $1.240,000 are as follows. In 2020, Concord Corp. sold equipment for $35,000. The machine had originally cost $84,900 and had accumulated depreciation of $31,700. The gain or loss is considered non-recurring. 2. The company discontinued operations of one of its subsidiaries during the current year at a loss of $194,900...

  • Novak Corp. has 149,380 shares of common stock outstanding. In 2020, the company reports income from...

    Novak Corp. has 149,380 shares of common stock outstanding. In 2020, the company reports income from continuing operations before income tax of $1,215,800. Additional transactions not considered in the $1,215,800 are as follows. 1.In 2020, Novak Corp. sold equipment for $38,600. The machine had originally cost $80,700 and had accumulated depreciation of $30,600. The gain or loss is considered non-recurring. 2.The company discontinued operations of one of its subsidiaries during the current year at a loss of $196,800 before taxes....

  • Wildhorse Corp. has 150,620 shares of common stock outstanding. In 2020, the company reports income from...

    Wildhorse Corp. has 150,620 shares of common stock outstanding. In 2020, the company reports income from continuing operations before income tax of $1,221,000. Additional transactions not considered in the $1,221.000 are as follows. 1. In 2020, Wildhorse Corp. sold equipment for $35,800. The machine had originally cost $84,300 and had accumulated depreciation of $33,900. The gain or loss is considered non-recurring. 2. The company discontinued operations of one of its subsidiaries during the current year at a loss of $191,200...

  • Waterway Corp. has 150,600 shares of common stock outstanding. In 2020, the company reports income from...

    Waterway Corp. has 150,600 shares of common stock outstanding. In 2020, the company reports income from continuing operations before income tax of $1,233,800. Additional transactions not considered in the $1,233,800 are as follows. 1. In 2020, Waterway Corp. sold equipment for $37,700. The machine had originally cost $81,400 and had accumulated depreciation of $30,400. The gain or loss is considered non-recurring. 2. The company discontinued operations of one of its subsidiaries during the current year at a loss of $191,000...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT