Selected account balances from the adjusted trial balance for Olinda Corporation as of its calendar year-end December 31 follow. Debit Credit a. Interest revenue $ 15,900 b. Depreciation expense—Equipment $ 35,900 c. Loss on sale of equipment 27,750 d. Accounts payable 45,900 e. Other operating expenses 108,300 f. Accumulated depreciation—Equipment 73,500 g. Gain from settlement of lawsuit 45,900 h. Accumulated depreciation—Buildings 178,300 i. Loss from operating a discontinued segment (pretax) 20,150 j. Gain on insurance recovery of tornado damage 31,020 k. Net sales 1,017,500 l. Depreciation expense—Buildings 53,900 m. Correction of overstatement of prior year’s sales (pretax) 17,900 n. Gain on sale of discontinued segment’s assets (pretax) 43,500 o. Loss from settlement of lawsuit 25,650 p. Income tax expense ? q. Cost of goods sold 501,500 Problem 17-6AA Part 2 Assume that the company’s income tax rate is 30% for all items. Compute the tax effects and after-tax amounts of the three items labeled pretax. 2a. What is the amount of income from continuing operations before income taxes? 2b. What is the amount of the income tax expense? 2c. What is the amount of income from continuing operations?
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
Selected account balances from the adjusted
| Debit | Credit | ||||||
| a. | Interest revenue | $ | 15,900 | ||||
| b. | $ | 35,900 | |||||
| c. | Loss on sale of equipment | 27,750 | |||||
| d. | Accounts payable | 45,900 | |||||
| e. | Other operating expenses | 108,300 | |||||
| f. | 73,500 | ||||||
| g. | Gain from settlement of lawsuit | 45,900 | |||||
| h. | Accumulated depreciation—Buildings | 178,300 | |||||
| i. | Loss from operating a discontinued segment (pretax) | 20,150 | |||||
| j. | Gain on insurance recovery of tornado damage | 31,020 | |||||
| k. | Net sales | 1,017,500 | |||||
| l. | Depreciation expense—Buildings | 53,900 | |||||
| m. | Correction of overstatement of prior year’s sales (pretax) | 17,900 | |||||
| n. | Gain on sale of discontinued segment’s assets (pretax) | 43,500 | |||||
| o. | Loss from settlement of lawsuit | 25,650 | |||||
| p. | Income tax expense | ? | |||||
| q. | Cost of goods sold | 501,500 | |||||
Problem 17-6AA Part 2
Assume that the company’s income tax rate is 30% for all items. Compute the tax effects and after-tax amounts of the three items labeled pretax.
2a. What is the amount of income from continuing operations before income taxes?
2b. What is the amount of the income tax expense?
2c. What is the amount of income from continuing operations?
![Problem 17-6AA Income statement computations and format LO A2
[The following information applies to the questions displayed below.]
Selected account balances from the adjusted trial balance for Olinda Corporation as of its calendar year-end December 31
follow.
Debit
Credit
$
$ 35,900
27,750
a.
Interest revenue
15,900
b. Depreciation expense-Equipment
c. Loss on sale of equipment
d. Accounts payable
e. Other operating expenses
f. Accumulated depreciation-Equipment
g. Gain from settlement of lawsuit
h. Accumulated depreciation-Buildings
i. Loss from operating a discontinued segment (pretax)
j. Gain on insurance recovery of tornado damage
k. Net sales
1. Depreciation expense-Buildings
m. Correction of overstatement of prior year's sales (pretax)
n. Gain on sale of discontinued segment's assets (pretax)
o. Loss from settlement of lawsuit
p. Income tax expense
q. Cost of goods sold
45,900
108,300
73,500
45,900
178,300
20,150
31,020
1,017,500
53,900
17,900
43,500
25,650
?
501,500](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F34b06b3a-cf06-42fd-a4ac-3963b5656154%2Fcdef2150-54f7-4494-9a33-7623a0f2602c%2Fd2fhdsf_processed.png&w=3840&q=75)
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