Question

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 year at a loss of $191,500 before taxes. Assume that this transaction meets the criteria for discontinued operations. 2. 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 or 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) or the Year Ended December 31, 201 210,20 ncome From Continuing Operations Before Income Tax ncome Tax Ex ncome From Continuing Operation iscontinued Operations 59,876 750,324 ss from Operations of Discontinued Subsidiar 2,30 ess: TApplicable Income Tax Reduction 5,07 57,22 ss from Disposal of Subsidiar 9,20 Less Income From Continuin 7,69 1,50 631,594 Gain on Condemnation 125,500

Answer 1

Cullumber Corp Income statement (partial) For the year ended December 31, 2017 $1,221,100 -464018 757082 Income from continuing operations before tax Less: Income tax Income from continuing operaions Discontinued operations Loss from operations of discontinued subsidiary Less: Applicable income tx reduction 92300 35074 57226 Loss from disposal of subsidiary 99200 Less: Applicable income tax reduction Loss from operations of discontinued operations (net of tax) 37696 61504 118730 638352 Income before extraordinary item Exraordinary item: Gain on condemnation 125500 -47690 Less: Applicable income tax reduction 77810 Net income $716,162