Given the Following Information About a Corporation's Current Year Activities

question 33

Essay

Given the following information about a corporation's current year activities, answer the questions below:
$\begin{array}{|l|r|r|}\hline& \underline { \text {Debit } }& \underline { \text {Credit } }\\\hline\text { Sales }&&\$ 250,000\\\hline \text { Cost of goods sold } & \$ 90,000 \\\hline \text { Other operating expenses } & 54,000 \\\hline \begin{array}{l}\text { Income from operation of discontinued Division W (net } \\\text { of } \$ 9,200 \text { tax })\end{array} &&30,800 \\\hline \begin{array}{l}\text { Extraordinary loss from hurricane damage (net of } \\\$ 11,000 \text { tax benefit) }\end{array} & 37,000 \\\hline \begin{array}{l}\text { Loss from disposal of Division W (net of } \$ 15,000 \text { tax } \\\text { benefit) }\end{array} & 45,000 \\\hline \text { Unusual loss on sale of equipment } & 12,000 \\\hline \begin{array}{l}\text { Effect on prior years' income of changing depreciation } \\\text { methods (net of } \$ 4,000 \text { tax) }\end{array} & 13,500 \\\hline\end{array}$ Compute the amounts that should be reported on the income statement as:
(1)Income from continuing operations.
(2)Income before extraordinary items and cumulative effect of changes in accounting principles.
(3)Net income.

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Definitions:

Periodic Inventory System

An inventory accounting system where updates to the inventory account occur at specific intervals, such as monthly or annually, rather than continuously.

Cost Of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including material and labor costs.

Gross Profit

The profit a company makes after deducting the costs associated with making and selling its products or providing its services.

Net Income

The total profit of a company after all expenses and taxes have been deducted from revenues, also known as net earnings or net profit.