Question

Ezekiel Corporation gathered the following information for the fiscal year ended December 31, 2020:

               Sales                                                                  $1,300,000

               Discontinued operations loss                                 110,000

               Selling and administrative expenses                      160,000

               Cost of goods sold                                                  900,000

               Loss on sale of equipment                                       40,000

Nola Corporation is subject to a 30% income tax rate.

Instructions

Prepare a partial income statement, beginning with income before income taxes. (show the steps please!)

Answer 1

Income statement

Sales	1,300,000
Cost of goods sold	-900,000
Gross profit	400,000
Selling and administrative expenses	-160,000
Operating income	240,000
Other expenses and losses :
Loss on sale of equipment	-40,000
Income before tax	200,000
Income tax expense	-60,000
Income from continuing operations	140,000
Discontinued operations loss, net of tax (110,000 - 110,000 x 30%)	-77,000
Net income	$63,000

Net income = $63,000

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