EBK INTERMEDIATE ACCOUNTING
3rd Edition
ISBN: 9780136946465
Author: SANNELLA
Publisher: VST
expand_more
expand_more
format_list_bulleted
Textbook Question
Chapter 5, Problem 5.5MC
Allison Corporation’s current year income from continuing operations before taxes was $1,000,000 before taking the following items into consideration:
Depreciation was understated by $100,000.- A strike by the employees of a supplier resulted in a loss of $200,000. This strike was the first such strike that Allison had encountered.
- The inventory at December 31 of the prior year was overstated by $300,000 The inventory at December 31 of the current year was correct.
- A food in Allison’s Houston facility destroyed equipment worth $500,000 The facility had just been rebuilt from damages that occurred in a flood in the prior year.
What was Allison's adjusted income from containing operations before taxes?
- a. $1,000 003
- b. $030,000
- c. $700,000
- d. $500,000
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
J.
On June 30, Bridgeport Corp. discontinued its operations in Mexico. During the year, the operating income was $204,000 before taxes. On September 1, Bridgeport disposed of the Mexico facility at a pretax loss of $672,000. The applicable tax rate is 30%. Show the Income from operations of Mexican Facility section of Bridgeport's income statement.
Ace Inc. disposes of an unprofitable segment of its business. The operation of the
segment suffered a $200,000 loss in the year of disposal. The loss on disposal of the
segment was $100,000. If the tax rate is 30%, and income before income taxes was
$1,600,000,
OA) the income from continuing operations is $1,120,000.
O
B)
the losses from discontinued operations are reported net of income taxes at
$300,000.
C) net income is $1,300,000.
D)
the income tax expense on the income before discontinued operations is
$390,000.
Chapter 5 Solutions
EBK INTERMEDIATE ACCOUNTING
Ch. 5 - What are the three limitations of the income...Ch. 5 - In what way is the income statement useful for...Ch. 5 - Prob. 5.3QCh. 5 - Prob. 5.4QCh. 5 - What management behavior does the term earnings...Ch. 5 - What is the difference between permanent and...Ch. 5 - Prob. 5.7QCh. 5 - Prob. 5.8QCh. 5 - Prob. 5.9QCh. 5 - Prob. 5.10Q
Ch. 5 - What are the six key items to be reported on the...Ch. 5 - Explain why operating income is an important...Ch. 5 - Prob. 5.13QCh. 5 - Prob. 5.14QCh. 5 - What items are included in net income?Ch. 5 - Are items of other comprehensive income included...Ch. 5 - What two choices must companies make when...Ch. 5 - Prob. 5.18QCh. 5 - Prob. 5.19QCh. 5 - Are companies reporting under U.S. GAAP required...Ch. 5 - What accounts are summarized on the statement of...Ch. 5 - What is financial statement analysis?Ch. 5 - Prob. 5.23QCh. 5 - What are comparative financial statements and why...Ch. 5 - What is the difference between vertical and...Ch. 5 - Prob. 5.26QCh. 5 - Explain the difference between return on equity...Ch. 5 - How is a companys profit margin calculated?Ch. 5 - Prob. 5.1MCCh. 5 - Moore Furniture Inc., a public company, has...Ch. 5 - Beach and Poole, CPA is reviewing income statement...Ch. 5 - Prob. 5.4MCCh. 5 - Allison Corporations current year income from...Ch. 5 - Prob. 5.6MCCh. 5 - Chili Co. had the following balances at December...Ch. 5 - Szuba Corporation reported the following...Ch. 5 - Prob. 5.9MCCh. 5 - Prob. 5.1BECh. 5 - Prob. 5.2BECh. 5 - Advantages and Disadvantages of the Income...Ch. 5 - Identify each of the earnings items as primarily...Ch. 5 - Income Statement Presentation. Place the...Ch. 5 - Statement of Net Income Presentation, IFRS. Which...Ch. 5 - Single-Step Statement of Net Income. Carr...Ch. 5 - Statement of Net Income, IFRS. Using the...Ch. 5 - Multiple-Step Statement of Net Income. Using the...Ch. 5 - Condensed Statement of Net Income. Using the...Ch. 5 - Prob. 5.11BECh. 5 - Prob. 5.12BECh. 5 - Discontinued Operations. Jojo, Inc. held a...Ch. 5 - Prob. 5.14BECh. 5 - Prob. 5.15BECh. 5 - Prob. 5.16BECh. 5 - Computation of Retained Earnings. Taxi Cabs, Inc...Ch. 5 - Computation of Contributed Capital. Using the...Ch. 5 - Prob. 5.19BECh. 5 - Prob. 5.20BECh. 5 - Prob. 5.21BECh. 5 - Ratio Analyses. Green Grasshopper Incorporated is...Ch. 5 - Multiple-Step and Single-Step Statements of Net...Ch. 5 - Condensed Statement of Net Income. Using the trial...Ch. 5 - Prob. 5.3ECh. 5 - Prob. 5.4ECh. 5 - Multiple-step Statement of Net Income. The current...Ch. 5 - Condensed Statement of Net Income. Using the...Ch. 5 - Multiple-step income Statement. Ciara s Cookie...Ch. 5 - Prob. 5.8ECh. 5 - Prepare Statement of Stockholders' Equity. Dane...Ch. 5 - Prepare Statement of Stockholders Equity. Ciaras...Ch. 5 - Prepare a Statement of Stockholders' Equity....Ch. 5 - Profitability Analyses. Use the following excerpt...Ch. 5 - Multiple-Step and Single-Step income Statement,...Ch. 5 - Condensed Income Statement. Using the information...Ch. 5 - Multiple-step, Single-step, and Condensed...Ch. 5 - Statement of Net Income Presentation. IFRS....Ch. 5 - Income Statement Presentation, Classification, and...Ch. 5 - Prob. 5.6PCh. 5 - Multiple-step, Single-step, and Condensed...Ch. 5 - Statement of Comprehensive Income Single-and...Ch. 5 - Prepare Statement of Stockholders Equity. Use the...Ch. 5 - Prob. 5.10PCh. 5 - Prob. 1JCCh. 5 - Prob. 1FSCCh. 5 - Prob. 2FSCCh. 5 - Prob. 1SSCCh. 5 - Surfing the Standards Case 2: Amounts Paid by...Ch. 5 - Prob. 1BCCCh. 5 - Prob. 2BCC
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- ABC COMPANY Income Statement shows $ 297,500 profit for the year 2019. The following information are provided to arrive the taxable income. The opening inventory is undervalued by $ 7,500. Provision for bad debts of $ 4,000 has not been included to calculate the above profit.The firm did not record $ 5,000 dividend income from equity investment. The depreciation of a permanent building cost $ 200,000 has been calculated at 5%.A vehicle was purchased for $ 10,000 for official use and it is recorded as an expenses. The firm incurred advertisement expenses of $ 27,000. However, the tax authority declared $ 12,000 as non-deductible for this year.Travel expenses was $ 3,800 out of which $ 3,000 is relevant for businessCalculate the taxable profit and the tax liability of the firm for the year 2019-20arrow_forwardMetlock, Inc. disposes of an unprofitable segment of its business. The operation of the segment suffered a S215000 loss in the year of disposal. The loss on disposal of the segment was $115000. If the tax rate is 319%, and income before income taxes was $1615000, a the income tax expense on the income before discontinued operations is $432300. b. the income from continuing operations is $1114350. c. the losses from discontinued operations are reported net of income taxes at $330000. d. net income is $1285000.arrow_forwardBramble, Inc. disposes of an unprofitable segment of its business. The operation of the segment suffered a $343000 loss in the year of disposal. The loss on disposal of the segment was $159000. If the tax rate is 20%, and income before income taxes was $2210000 O the income tax expense on the income before discontinued operations is $341600. O net income is $1708000. O the losses from discontinued operations are reported net of income taxes at $159000. O the income from continuing operations is $1768000.arrow_forward
- 1 Lupton Inc. disposes of an unprofitable segment of its business. The operation of the segment suffered a S200000 loss in the year of disposal. The loss on disposal of the segment was $100000. If the tax rate is 30%, and income before income taxes was S1600000, a the losses from discontinued operations are reported net of income taxes at $300000. the income tax expense on the income before discontinued operations is $390000. c the income from continuing operations is $1120000. d net income is $1300000.arrow_forward1 Lupton Inc. disposes of an unprofitable segment of its business. The operation of the segment suffered a S200000 loss in the year of disposal. The loss on disposal of the segment was $100000. If the tax rate is 30%, and income before income taxes was $1600000, a the losses from discontinued operations are reported net of income taxes at $300000. b the income tax expense on the income before discontinued operations is $390000. c the income from continuing operations is $1120000. d net income is $1300000.arrow_forwardThe following accounts are extracted from the worksheet of X Company on December 31, 2020: Income from continuing operati ons after taxes: $2,000,000 • During the year, the company suffered from abnormal and infrequent hurricane damages that had resulted in a $60,000 pretax loss During the year also, the company stopped the activities of its REW segment which had resulted in a pretax operating loss of $100,000 and a net of tax loss on di sposal $20.000 Tax Rate was 30% Based on the data above, discontinued operations will have the following effect in the income statement: Decrease by $90,000 Decrease by $120.000 Decrease by $84,000 None of the abovearrow_forward
- During an audit of Madison Company's December 31, 2020 records it was discovered that the company did not accurately accrue for $12,500 of depreciation expense. The accrual of interest expense of $4,500 was also omitted. These errors occurred in 2019 and have a material impact on Madison's financial records. Madison's net income for the year was $123,000. The company is subject to a 35% tax rate. The company had a retained earnings balance of $557,500 on January 1, 2020. No dividends were paid. 1) General Journal (8) 2) Statement of Retained Earnings (7)arrow_forwardDuring an audit of Madison Company’s December 31, 2020 records it was discovered that the company did not accurately accrue for $12,500 of depreciation expense. The accrual of interest expense of $4,500 was also omitted. These errors occurred in 2019 and have a material impact on Madison’s financial records. Madison’s net income for the year was $123,000. The company is subject to a 35% tax rate. The company had a retained earnings balance of $557,500 on January 1, 2020. No dividends were paid. Required: 1. Prepare the necessary journal entries to correct the accounting records of Madison Company’s books. 2. Prepare the statement of retained earnings for 2020. 1. Prepare the necessary journal entries to correct the accounting records of Madison Company’s books. For grading purposes, prepare four separate entries dated December 31. General Journal Instructions PAGE 1 GENERAL JOURNAL DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT 1 2…arrow_forwardDuring an audit of Madison Company’s December 31, 2020 records it was discovered that the company did not accurately accrue for $12,500 of depreciation expense. The accrual of interest expense of $4,500 was also omitted. These errors occurred in 2019 and have a material impact on Madison’s financial records. Madison’s net income for the year was $123,000. The company is subject to a 35% tax rate. The company had a retained earnings balance of $557,500 on January 1, 2020. No dividends were paid. Required: 1. Prepare the necessary journal entries to correct the accounting records of Madison Company’s books. For grading purposes, prepare four separate entries dated December 31. General Journal Instructions PAGE 1 GENERAL JOURNAL DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT 1 2 3 4 5 6 7 8arrow_forward
- Glassworks Co. acquired equipment for 896,000 inclusive of 96,000 refundable purchase tax. A cash discount of 24,000 was available but Glassworks deferred the payment until the end of the credit term. Glassworks incurred freight and installation costs of 40,000. Three weeks after he equipment was installed and used in Glassworks'main office, Glassworks relocated the equipment to one of its branches incurring relocation and reinstallation cost of 50,000. Requirement: Compute for the total cost of equipment.arrow_forwardAccounting Company A is preparing its financial statements as at 31 December 20X3. On 31 December 20X3, Company A acquired an asset for 900, which is expected to be consumed by the end of 20X4. No tax deduction can be obtained for the cost of the asset. The company’s intention is to use the asset and not to sell it. The sale of assets is taxed at 40%. Internal consumption is taxed at 30%. What is the amount of deferred tax liability relating to the acquired asset as at 31 December 20X3?arrow_forwardShannon Corporation began operations on January 1, 2019. Financial statements for the years ended December 31, 2019 and 2020, contained the following errors: In addition, on December 31, 2020, fully depreciated machinery was sold for 10,800 cash, but the sale was not recorded until 2021. There were no other errors during 2019 or 2020, and no corrections have been made for any of the errors. Refer to the information for Shannon Corporation above. Ignoring income taxes, what is the total effect of the errors on the amount of working capital (current assets minus current liabilities) at December 31, 2020? a. working capital overstated by 4,200 b. working capital understated by 5,800 c. working capital understated by 6,000 d. working capital understated by 9,800arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage LearningPrinciples of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax CollegeManagerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
- Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,Century 21 Accounting Multicolumn JournalAccountingISBN:9781337679503Author:GilbertsonPublisher:Cengage
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:Cengage Learning,
Century 21 Accounting Multicolumn Journal
Accounting
ISBN:9781337679503
Author:Gilbertson
Publisher:Cengage
How to Calculate your Income Tax? Step-by-Step Guide for Income Tax Calculation; Author: ETMONEY;https://www.youtube.com/watch?v=QdJKpSXCYmQ;License: Standard YouTube License, CC-BY
How to Calculate Federal Income Tax; Author: Edspira;https://www.youtube.com/watch?v=2LrvRqOEYk8;License: Standard Youtube License