Chapter 13, Problem 6PSB

Problem 13-6B^AIncome statement computations and format A2

Selected account balances from the adjusted trial balance for Harbor Corp as of its calendar year-end December 31, 2017 follow.

	Debit	Credit
Accumulated depreciation-Buildings…………………………		$400,000
Interest revenue……………………………………………….		20,000
Net sales………………………………………………………		2,640,000
Income taxes expense…………………………………………	$ ?
Loss on Hurricane damage……………………………………	48,000
Accumulated depreciation—Equipment……………………..		220,000
Other operating expenses…………………………………….	328,000
Depreciation expense—Equipment………………………….	100,000
Loss from settlement of lawsuit……………………………..	36,000
Gain from Settlement of lawsuit…………………………….		68,000
Loss on sale of equipment…………………………………..	24,000
Loss from operating a discontinued segment (pretax)………	120,000
Depreciation expense—Buildings…………………………..	156,000
Correction of overstatements of prior year’s expense (pretax.)		48,000
Cost of goods sold…………………………………………..	1,040,000
Loss on sale of discontinued segment’s assets (pretax)…….	180,000
Accounts payable……………………………………………		132,000

Required

Answer each of the following questions by providing supporting computations.

1. Assume that the company’s income tax rate is 25% for all items. Identify the tax effects and after-tax amounts of the three items labeled pretax.
2. What is the amount of income from continuing operations before income taxes? What is the amount of income taxes expense? What is the amount of income from continuing operations?
3. What is the total amount of after-tax income (loss) associated with the discontinued segment?
Check (3) $ (225.000)

What is the amount of net income for the year?

(4) $522,000