Selected account balances from the adjusted trial balance for Halogen Corp. as of its calendar year end December 31, 2011, follow.
|
|
Debit |
Credit |
|
a. Other operating expenses |
$ 338,000 |
|
|
b. Depreciation expense—Buildings |
110,000 |
|
|
c. Loss from settlement of lawsuit |
46,000 |
|
|
d. Income taxes expense |
? |
|
|
e. Loss on hurricane damage (pretax and extraordinary) |
74,000 |
|
|
f. Accumulated depreciation—Buildings |
|
$ 230,000 |
|
g. Accumulated depreciation—Equipment |
|
410,000 |
|
h. Interest revenue |
|
30,000 |
|
i. Net sales |
|
2,650,000 |
|
j. Gain from settlement of lawsuit |
|
78,000 |
|
k. Loss on sale of building |
34,000 |
|
|
l. Loss from operating a discontinued segment (pretax) |
130,000 |
|
|
m. Accounts payable |
|
142,000 |
|
n. Correction of overstatement of prior year’s expense (pretax) |
|
58,000 |
|
o. Cost of goods sold |
1,050,000 |
|
|
p. Loss on sale of discontinued segment’s assets (pretax) |
190,000 |
|
|
q. Depreciation expense—Equipment |
166,000 |
|
Required
Answer each of the following questions by providing supporting computations.
1. Assume that the company’s income tax rate is 25% for all items. Identify the tax effects and after tax amounts of the four items labeled pretax.
2. What is the amount of income from continuing operations before income taxes? What is the amount of income taxes expense? What is the amount of income from continuing operations?
3. What is the total amount of after tax income (loss) associated with the discontinued segment?
4. What is the amount of income (loss) before the extraordinary items?
5. What is the amount of net income for the year?