Chapter 17, Problem 6BPSB

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	2,640,000
Interest Revenue	20,000
Gain from settlement of lawsuit	68,000
Total Revenue		2,728,000
Cost of goods sold	1,040,000
Depreciation expense- Equipment	100,000
Depreciation expense- Buildings	156,000
Loss on sale of equipment	24,000
Other operating expenses	328,000
Loss from settlement of lawsuit	36,000
Total expenses		1,684,000
Income from continuing operations before taxes		1,044,000
Income tax expense @25%		261,000
Income from continuing operations after taxes		783,000

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	(90,000)
Loss on sale of discontinued segment’s assets after tax	(135,000)
After- tax income /(loss) associated with the discounted segment	(225,000)

Requirement 4-

To Calculate:

The amount of Net Income.

Income / (Loss) before extraordinary items	Amount ($)
Income from continuing operations after taxes	783,000
After- tax income associated with the discounted segment	(225,000)
Income before extraordinary income	558,000
Loss on Hurricane damage	(36,000)
Net Income	522,000