The income statement of Rawl Company for the year ended December 31, 2010, shows the following:
|
Net sales |
$360,000 |
|
Cost of sales |
190,000 |
|
Gross profit |
170,000 |
|
Selling, general, and administrative expense |
80,000 |
|
Income before unusual write offs |
90,000 |
|
Provision for unusual write offs |
50,000 |
|
Earnings from operations before income taxes |
40,000 |
|
Income taxes |
20,000 |
|
Net earnings from operations before extraordinary charge |
20,000 |
|
Extraordinary charge, net of tax of $10,000 |
50,000 |
|
Net earnings (loss) |
($30,000) |
Required Compute the net earnings remaining after removing unusual write offs and the extraordinary charge. Remove these items net of tax. Estimate the tax rate for unusual write offs based on the taxes on operating income.