Hey guys,
My pleasure to be in among CPA candidates full of power and ambition like u 😉 [Even ones who have previous bad experience I am sure 100% is it a great chance to be more better than before 😉 think different]
I would like to share you with this below simple question 🙂
Here you are the issue ( Becker 2011)
Vane comp. trial Balance of income st accounts for the year ended dec. 31Y1 including the following:
Dr. Cr.
Sales $ 575,000
Cost of sales $ 240,000
Administrative Exp. 70,000
Loss on sale of Equip. 10,000
Interest Rev. 25,000
Freight out 15,000
Loss on early retirement of
long term debt( unusual& infreq.) 20,000
Uncountable Accounts Exp. 15,000
$ 420,000 $ 600,000
======== ===========
Other info:
Finished goods inventory:
Jan 1 Y1 $ 400,000
Dec. 31 Y1 $ 360,000
Vane income tax rate is 30%
In Vane's Y 1 multiple-step income statement, what amount should Vane report as income from continuing operations?
a) $126,000
b) $129,500
c) $140,000
d) $147,000
The answer was as following :
Net of credits over debits ($600-420) $180,000
add: extraordinary item- loss on early
retirement of long term debt 20,000
Income from continuing operation $ 200,000
Net of tax rate (100%-30% tax) 70%
Income after income taxes from continuing operations $ 140,000
Good Luck!
If you are not willing to risk the unusual, you will have to settle for the ordinary.
.