Question

In the current year, Randa Merchandising, Inc., sold its interest in a chain of wholesale outlets, taking the company completely out of the wholesaling business. The company still operates its retail outlets. Debit Credit $2,900,000 251,000 Item 1. Net sales 2. Gain on state's condemnation of company property 3. Cost of goods sold 4. Income tax expense 5. Depreciation expense 6. Gain on sale of wholesale business segment, net of tax 7. Loss from operating wholesale business segment, net of tax 8. Loss of assets from meteor strike $1,480,000 227,000 227,500 800,000 470,000 674,000 Prepare the December 31 year-end income statement. (Loss amounts should be indicated with a minus sign.)

Answer 1

*Minus sign for the loss is indicated.

Income Statement
For the year ended December 31
Net Sales		2900000
Expenses:
Cost of goods sold	1480000
Depreciation expense	227500
Total operating expenses		1707500
		1192500
Other unusual and /or independent gains (losses)
Gain on state's condemnation of company property		251000
Loss on assets from meteor strike, net of tax		-674000
Income from continuing operations before taxes		769500
Income taxes expense		227000
Income from continuing operations		542500
Discontinued segment
Loss from operating wholesale business segment (net of tax)	-470000
Gain on sale of wholesale business segment (net of tax)	800000
		330000
Net Income		872500