At Ruth Company, events and transactions during 2020 included the following. The tax rate for all...
At Ruth Company, events and transactions during 2020 included the following. The tax rate for all items is 20%. (1) Depreciation for 2018 was found to be understated by $150,000. (2) A strike by the employees of a supplier resulted in a loss of $125,000. (3) The inventory at December 31, 2018 was overstated by $200,000. The effect of these events and transactions on 2020 income from continuing operations net of tax would be A. ($280,000). B. ($380,000). C. ($220,000). D. ($100,000).
Homework Answers
| Loss from strike | (125000) | |
| Tax effect | 25000 | =125000*20% |
| Income from continuing operations net of tax | (100000) | |
| Option D ($100,000) is correct |
| Depreciation for 2018 and Inventory error would be adjusted through Retained Earnings. |
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