Disposal of a business segment
LTB Enterprises consists of four separate divisions: building products, chemicals, mining, and plastics. On March 15, 2012, LTB sold the chemicals division for $625,000 cash. Financial information related to the chemicals division follows:
|
1/1-3/15/12 |
3/15/2012 |
||
|
Sales |
$175,000 |
Assets |
$1,850,000 |
|
Operating expenses |
160,000 |
Liabilities |
1,400,000 |
|
Net operating income (loss) |
$15,000 |
a. Provide the journal entry (or entries) to record the sale of the chemicals division. Assume an income tax rate of 35 percent.
b. Prepare the section of LTB”s 2012 income statement that relates to the disposal of the business segment.