Professional Simulation
In this simulation, you are asked to compute various income amounts. Assume a tax rate of 30% and 100,000 shares of common stock outstanding during the year. Prepare responses to all parts. Jude Law Corporation provides you with the following pretax information for the period.
|
Sales revenue |
$3,200,000 |
|
Cost of goods sold |
1,920,000 |
|
Interest revenue |
10,000 |
|
Loss from abandonment of plant assets |
40,000 |
|
Selling expenses |
340,000 |
|
Administrative expenses |
280,000 |
|
Cumulative effect on prior years |
|
|
Loss from earthquake |
50,000 |
|
Gain on disposal of a component of |
40,000 |
|
Jude Law Corporation’s business |
90,000 |
Explain the proper accounting treatment for loss on abandonment of plant assets, gain on disposal of a component of a business, and change in inventory costing methods. Compute the following five items.
(a) Gross profit.
(b) Income from continuing operations before income tax.
(c) Income from continuing operations.
(d) Net income.
(e) Earnings per share.