Chapter 17, Problem 6APSA

To determine

Concept Introduction:

Income Statement

Income statement is one of the financial statements of the company which provides details of every income earned and expenses incurred during the period. It shows the company’s financial performance of a particular accounting period.

Requirement 1-

To Identify:

Tax effects and after- tax amounts.

To determine

Requirement 2-

To Compute:

The amount of income from continuing operations.

Income from continuing operations	Amount ($)	Amount ($)
Net sales	998,000
Interest Revenue	14,000
Gain from settlement of lawsuit	44,000
Total Revenue		1,056,000
Cost of goods sold	482,500
Depreciation expense- Equipment	34,000
Depreciation expense- Buildings	52,000
Loss on sale of equipment	25,850
Other operating expenses	106,400
Loss from settlement of lawsuit	23,250
Total expenses		724,000
Income from continuing operations before taxes		332,000
Income tax expense @30%		99,600
Income from continuing operations after taxes		232,400

To determine

Requirement 3-

To Calculate:

The total amount of after-tax income.

Income from discounted segment	Amount ($)
Loss from operating a discontinued segment after tax	(12,775)
Gain on sale of discontinued segment’s assets after tax	23,800
After- tax income /(loss) associated with the discounted segment	11,025

Requirement 4-

To Calculate:

The amount of Net Income.

Income / (Loss) before extraordinary items	Amount ($)
Income from continuing operations after taxes	232,400
After- tax income associated with the discounted segment	11,025
Income before extraordinary income	243,425
Gain on insurance recovery of tornado damage	14,000
Net Income	257,425