The income statement of Rawl Company for the year ended December 31, 2000 shows:
|
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-off stand the extraordinary charge. Remove these items net of tax. Estimate the tax rate for unusual write-offs based on the taxes on operating income.