Wright Company reports the following information for the year ended December 31, 2016: Pretax income from continuing operations (a) $160,000 Pretax income from operations of discontinued Division M 27,000 Pretax loss on disposal of Division M (45,000) Pretax correction of error in understating depreciation in 2015 (8,000) Retained earnings, January 1, 2016 410,000 Cash dividends during 2016 48,000 Income tax payable (b) 41,000 a: Of this amount, revenues are $400,000 and expenses are $240,000. b: Of this amount, $6,750 relates to the pretax income from the operations of discontinued Division M; pretax loss on the disposal of Division M resulted in an income tax savings of $11,250; and pretax correction of the depreciation error resulted in an income tax savings of $2,000. Required: 1. Prepare the year-end journal entry necessary to record the 2016 intraperiod income tax allocation. 2. Prepare Wright’s 2016 income statement and statement of retained earnings.
Wright Company reports the following information for the year ended December 31, 2016: Pretax income from continuing operations (a) $160,000 Pretax income from operations of discontinued Division M 27,000 Pretax loss on disposal of Division M (45,000) Pretax correction of error in understating depreciation in 2015 (8,000) Retained earnings, January 1, 2016 410,000 Cash dividends during 2016 48,000 Income tax payable (b) 41,000 a: Of this amount, revenues are $400,000 and expenses are $240,000. b: Of this amount, $6,750 relates to the pretax income from the operations of discontinued Division M; pretax loss on the disposal of Division M resulted in an income tax savings of $11,250; and pretax correction of the depreciation error resulted in an income tax savings of $2,000. Required: 1. Prepare the year-end journal entry necessary to record the 2016 intraperiod income tax allocation. 2. Prepare Wright’s 2016 income statement and statement of retained earnings.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Wright Company reports the following information for the year ended December 31, 2016:
| Pretax income from continuing operations (a) | $160,000 |
| Pretax income from operations of discontinued Division M | 27,000 |
| Pretax loss on disposal of Division M | (45,000) |
| Pretax correction of error in understating |
(8,000) |
| 410,000 | |
| Cash dividends during 2016 | 48,000 |
| Income tax payable (b) | 41,000 |
a: Of this amount, revenues are $400,000 and expenses are $240,000.
b: Of this amount, $6,750 relates to the pretax income from the operations of discontinued Division M; pretax loss on the disposal of Division M resulted in an income tax savings of $11,250; and pretax correction of the depreciation error resulted in an income tax savings of $2,000.
Required:
| 1. | Prepare the year-end |
| 2. | Prepare Wright’s 2016 income statement and statement of retained earnings. |
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