Lester Corporation reports $119,000 of both pretax accounting income and taxable income in 2019. In addition to
Question:
Lester Corporation reports $119,000 of both pretax accounting “income” and taxable income in 2019. In addition to income from continuing operations (of which revenues are $500,000), included in this “income” is a $17,000 loss from operations of discontinued Division W, a $15,000 gain on the disposal of Division W, and a $14,000 correction of an error due to the understatement of bad debt expense in 2018. Lester is subject to a 20% tax rate on the first $50,000 of income and a rate of 25% on income in excess of $50,000.
Required:
1. Show how this information is disclosed on Lester’s 2019 income statement.
2. Prepare Lester’s 2019 statement of retained earnings. (Assume a beginning retained earnings balance of $191,000 and cash dividends during 2019 amounting to $65,000.)
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
Step by Step Answer:
Intermediate Accounting Reporting and Analysis
ISBN: 978-1337788281
3rd edition
Authors: James M. Wahlen, Jefferson P. Jones, Donald Pagach