The income statement of Jones Company for the year ended December 31, 2010, follows.
|
Revenue from sales |
$790,000 |
|
|
Cost of products sold |
410,000 |
|
|
Gross profit |
380,000 |
|
|
Operating expenses: |
||
|
Selling expenses |
$40,000 |
|
|
General expenses |
80,000 |
120,000 |
|
Operating income |
260,000 |
|
|
Equity in earnings of nonconsolidated subsidiaries (loss) |
20,000 |
|
|
Operating income before income taxes |
240,000 |
|
|
Taxes related to operations |
94,000 |
|
|
Net income from operations |
146,000 |
|
|
Discontinued operations: |
||
|
Loss from operations of discontinued segment (less applicable income tax credit of $30,000) |
||
|
($70,000) |
||
|
Loss on disposal of segment (Less applicable income tax credit of $50,000) |
100,000 |
170,000 |
|
Income before cumulative effect of change in accounting principle |
24,000 |
|
|
Cumulative effect of change in accounting principle (less applicable income taxes of $25,000) |
50,000 |
|
|
Net income |
$26,000 |
Required
a. Compute the net earnings remaining after removing nonrecurring items.
b. Determine the earnings (loss) from the nonconsolidated subsidiary.
c. Determine the total tax amount.