Question

Wilcox Corporation had income from continuing operations of $650,000 (after taxes) in 2020. In addition, the following information, which has not been considered, is as follows.

1. A machine was sold for $140,000 cash during the year at a time when its book value was $110,000. (Depreciation has been properly recorded.) The company often sells machinery of this type.

2. Wilcox decided to discontinue its stereo division in 2020. During the current year, the loss on the disposal of this component of the business was $210,000 less applicable taxes.

Required: Present in good form the Income Statement of Wilcox Corporation for 2020 starting with "Income from Continuing Operations." Assume that Wilcox's tax rate is 20% and 200,000 shares of common stock were outstanding during the year.

Answer 1

income from counting operations==>650000

gain on sale of machinery==>30,000

loss on the disposal of this component of the business was $210,000

net taxable income ==> 650000+30000-210000 ==>470,000

tax rate is 20%

==> 470,000*20%==>94,000

net income after tax ==> 470,000-94,000==>376,000

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