Required information

Problem 17-6AA Income statement computations and format LO A2

[The following information applies to the questions displayed below.] Selected account balances from the adjusted trial balance for Olinda Corporation as of its calendar year-end December 31, 2017, follow.

		Debit			Credit
a.	Interest revenue				$	14,500
b.	Depreciation expenseEquipment.	$	34,500
c.	Loss on sale of equipment		26,350
d.	Accounts payable					44,500
e.	Other operating expenses		106,900
f.	Accumulated depreciationEquipment					72,100
g.	Gain from settlement of lawsuit					44,500
h.	Accumulated depreciationBuildings					175,500
i.	Loss from operating a discontinued segment (pretax)		18,750
j.	Gain on insurance recovery of tornado damage					29,620
k.	Net sales					1,003,500
l.	Depreciation expenseBuildings		52,500
m.	Correction of overstatement of prior years sales (pretax)		16,500
n.	Gain on sale of discontinued segments assets (pretax)					36,500
o.	Loss from settlement of lawsuit		24,250
p.	Income taxes expense		?
q.	Cost of goods sold		487,500

Problem 17-6 Part 1

Required: 1. Assume that the companys income tax rate is 40% for all items. Compute the tax effects and after-tax amounts of the three items labeled pretax.

Required information

Problem 17-6AA Income statement computations and format LO A2

[The following information applies to the questions displayed below.] Selected account balances from the adjusted trial balance for Olinda Corporation as of its calendar year-end December 31, 2017, follow.

		Debit			Credit
a.	Interest revenue				$	14,500
b.	Depreciation expenseEquipment.	$	34,500
c.	Loss on sale of equipment		26,350
d.	Accounts payable					44,500
e.	Other operating expenses		106,900
f.	Accumulated depreciationEquipment					72,100
g.	Gain from settlement of lawsuit					44,500
h.	Accumulated depreciationBuildings					175,500
i.	Loss from operating a discontinued segment (pretax)		18,750
j.	Gain on insurance recovery of tornado damage					29,620
k.	Net sales					1,003,500
l.	Depreciation expenseBuildings		52,500
m.	Correction of overstatement of prior years sales (pretax)		16,500
n.	Gain on sale of discontinued segments assets (pretax)					36,500
o.	Loss from settlement of lawsuit		24,250
p.	Income taxes expense		?
q.	Cost of goods sold		487,500

Problem 17-6 Part 1

Required: 1. Assume that the companys income tax rate is 40% for all items. Compute the tax effects and after-tax amounts of the three items labeled pretax.

Required information

Problem 17-6AA Income statement computations and format LO A2

[The following information applies to the questions displayed below.] Selected account balances from the adjusted trial balance for Olinda Corporation as of its calendar year-end December 31, 2017, follow.

		Debit			Credit
a.	Interest revenue				$	14,500
b.	Depreciation expenseEquipment.	$	34,500
c.	Loss on sale of equipment		26,350
d.	Accounts payable					44,500
e.	Other operating expenses		106,900
f.	Accumulated depreciationEquipment					72,100
g.	Gain from settlement of lawsuit					44,500
h.	Accumulated depreciationBuildings					175,500
i.	Loss from operating a discontinued segment (pretax)		18,750
j.	Gain on insurance recovery of tornado damage					29,620
k.	Net sales					1,003,500
l.	Depreciation expenseBuildings		52,500
m.	Correction of overstatement of prior years sales (pretax)		16,500
n.	Gain on sale of discontinued segments assets (pretax)					36,500
o.	Loss from settlement of lawsuit		24,250
p.	Income taxes expense		?
q.	Cost of goods sold		487,500

Problem 17-6 Part 1

Required: 1. Assume that the companys income tax rate is 40% for all items. Compute the tax effects and after-tax amounts of the three items labeled pretax.

	Pretax	40% Tax Effect	After-Tax
Loss from operating a discontinued segment
Correction of overstatement of prior years sales
Gain on sale of discontinued segments assets

What is the amount of income from continuing operations before income taxes?

Income from continuing operations before taxes

What is the amount of the income taxes expense?

Income taxes expense

What is the amount of income from continuing operations?

Income from continuing operations after taxes

What is the total amount of after-tax income (loss) associated with the discontinued segment?

After-tax income from discontinued segment

What is the amount of net income for the year?

Net income