In: Accounting
Richmond Inc. reported income from operations during 2019 of $750,000. Additional transactions occurring in 2019 but not considered in the $750,000 are as follows:
1.The corporation experiences an uninsured loss due to government determination of possible contamination in the amount of $55,000 before taxes during the year. The company had never experienced a similar situation in its history.
2.The corporation decided to change from the weighted average method of inventory to the First-In First-Out method. The effect of this change on prior years is an increase in income before taxes of $35,000. The First-in First-out method has been used for 2019.
3.Investments sold resulted in a loss of $92,800 before taxes.
4.Available-for-Sale Debt Securities experienced an unrealized holding gain of $32,000 before taxes during 2019.
5.The board of directors voted on January 1, 2019, to dispose of a segment of its business. On that date the book value of the segment was $1,400,000. The corporation was committed to the plan to sell and was actively looking for a buyer. The segment was sold on November 30, 2019 for $1,180,000. The segment generated an income of $375,000 from operations from January 1, 2019 to the disposal date. The disposal of the segment is viewed as a strategic shift that will have a major effect on the operations and the financial results of the corporation.
6.Retained Earnings had a balance of $80,000 at January 1, 2019.
7.The income tax rate for 2019 is 30%.
Calculate the income from continuing operations that should be reported in the income statement for the year ended December 31, 2019. Please use the following format for your answer $XXX,XXX.XX
Richmond Inc. reported income from operations during 2019 of $750,000. Additional transactions occurring in 2019 but not considered in the $750,000 are as follows: | |
Impacted Accounts | |
1.The corporation experiences an uninsured loss due to government determination of possible contamination in the amount of $55,000 before taxes during the year. The company had never experienced a similar situation in its history. | Extraorinary Items |
2.The corporation decided to change from the weighted average method of inventory to the First-In First-Out method. The effect of this change on prior years is an increase in income before taxes of $35,000. The First-in First-out method has been used for 2019. | Retained Earnings Statement |
3.Investments sold resulted in a loss of $92,800 before taxes. | |
4.Available-for-Sale Debt Securities experienced an unrealized holding gain of $32,000 before taxes during 2019. | other comprehensive income |
5.The board of directors voted on January 1, 2019, to dispose of a segment of its business. On that date the book value of the segment was $1,400,000. The corporation was committed to the plan to sell and was actively looking for a buyer. The segment was sold on November 30, 2019 for $1,180,000. The segment generated an income of $375,000 from operations from January 1, 2019 to the disposal date. The disposal of the segment is viewed as a strategic shift that will have a major effect on the operations and the financial results of the corporation. | Discounted operations: |
6.Retained Earnings had a balance of $80,000 at January 1, 2019. | Balance Sheet |
7.The income tax rate for 2019 is 30%. | |
Calculate the income from continuing operations that should be reported in the income statement for the year ended December 31, 2019. Please use the following format for your answer $XXX,XXX.XX | |
Income From Operation | $ 750,000.00 |
Other losses and income | |
Loss on sale of investment | $ (92,800.00) |
EBT | $ 657,200.00 |
Less: Tax @30% | $ (197,160.00) |
income from continuing operations | $ 460,040.00 |