Question

Presented below are selected ledger accounts of Whispering Corporation as of December 31, 2020. Cash Administrative expenses Selling expenses Net sales Cost of goods sold Cash dividends declared (2020) Cash dividends paid (2020) Discontinued operations (loss before income taxes) Depreciation expense, not recorded in 2019 Retained earnings, December 31, 2019 Effective tax rate 20% $65,000 130,000 104,000 702,000 273,000 26,000 19,500 52,000 39,000 117,000 * Your answer is incorrect. Compute net income for 2020. Net income $ 702000

Answer 1

1)
Particulars	Amount (in $ )	Amount (in $ )
Net sales		$ 702,000
Less:
- Cost of goods sold	$ 273,000
- Administrative expenses	$ 130,000
- Selling expenses	$ 104,000
- Discontinued operations (loss before income taxes )	$ 52,000	($ 559,000)
Income before income tax		$ 143,000
Less: Income tax                 ( $ 143,000 x 20% )		($ 28,600)
Net income		$ 114,400

2)
WHISPERING CORPORATION Income Statement For the year ended December 31,2017
Income from Continuing operations before income taxes ( $ 702,000 (-) $ 273,000 (-) $ 130,000 (-) $ 104,000 )	$ 195,000
Income tax ( $ 195,000 x 20% )	($ 39,000)
Income from Continuing operations	$ 156,000
Discontinued operations,Net of tax ( $ 52,000 x ( 1 - 20 % )	($ 41,600)
Net income / (Loss )	$ 114,400
Earnings Per share:
Income from Continuing operations ( $ 156,000 / 10,000 shares )	$ 15.60
Loss on Discontinued operations, Net of tax ( $ 41,600 / 10,000 shares )	($ 4.16)
Net income / (Loss )	$ 11.44