11/19/21, 8:45 AM Assignment Print View

Score: 50/50 Points 100 %

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11/19/21, 8:45 AM Assignment Print View
 
7. Award: 15 out of 15.00 points  

The following table shows the balances from various accounts in the adjusted trial balance for UniLink Telecom Corp.
as of December 31, 2020:
 
        Debit     Credit  
a.   Interest income      $ 30,000  
b.   Depreciation expense, equipment $ 88,800       
c.   Loss on sale of office equipment   60,600       
d.   Accounts payable        102,000  
e.   Other operating expenses   236,400     
f.   Accumulated depreciation, equipment        188,400  
g.   Gain from settling a lawsuit        103,200  
h.   Cumulative effect of change in accounting principle (pre-tax)        153,000  
i.   Accumulated depreciation, buildings        404,400  
j.   Loss from operating a discontinued operation (pre-tax)   48,000       
k.   Gain on expropriation of land and building by government        69,600  
l.   Sales        2,389,200  
m.   Depreciation expense, buildings   130,800       
n.   Correction of overstatement of prior year’s sales (pre-tax)   37,200       
o.   Gain on sale of discontinued operation’s assets (pre-tax)        80,400  
p.   Loss from settling a lawsuit   58,800       
q.   Income taxes expense   ?       
r.   Cost of goods sold   1,194,000       

Required:
1. Assuming that the company’s income tax rate is 25%, what are the tax effects and after-tax measures of the items
labelled as pre-tax? (Negative answers should be indicated by a minus sign.)

25% After-
Pre-tax Tax Tax

Effect
Measure

$ $
Cumulative effect of change in accounting principle   $ 114,750 
153,000 (38,250)
Loss from operating a discontinued operation (48,000)  12,000  (36,000) 

Correction of overstatement of prior year’s sales (37,200)  9,300  (27,900) 

Gain on sale of discontinued operation’s assets 80,400  (20,100)  60,300 

2. Prepare a multi-step income statement for the year ended December 31, 2020. (Amounts to be deducted should
be indicated by a minus sign in the other revenues and expenses section and the discontinued operations
section.)

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11/19/21, 8:45 AM Assignment Print View

UNILINK TELECOM CORP.

Income Statement
For Year Ended December 31, 2020
Sales  $ 2,389,200 

Cost of goods sold  (1,194,000) 

Gross profit on sales  $ 1,195,200 

Operating expenses:
Depreciation expense, equipment  88,800 

Depreciation expense, buildings  130,800 

Other operating expenses  236,400  456,000 

Operating profit  $ 739,200 

Other revenues and expenses:

Interest income  30,000 

Gain from settling a lawsuit  103,200 

Gain on expropriation of land and building  69,600 

Loss on sale of office equipment  (60,600) 

Loss from settling a lawsuit  (58,800)  83,400 

Profit from continuing operations before tax  822,600 

Income tax expense  205,650 

Profit from continuing operations  $ 616,950 

Discontinued operations:
Loss from operating a discontinued operations (after-tax)  (36,000) 

Gain on sale of discontinued operation’s assets (after-tax)  60,300  24,300 

Profit  $ 641,250 

References

Worksheet Learning Objective: 13-

04 Explain the form and
content of a corporate
income statement with
continuing and
discontinued operations
and earnings per share.

The following table shows the balances from various accounts in the adjusted trial balance for UniLink Telecom Corp.
as of December 31, 2020:
 
        Debit     Credit  
a.   Interest income      $ 30,000  
b.   Depreciation expense, equipment $ 88,800       
c.   Loss on sale of office equipment   60,600       
d.   Accounts payable        102,000  
e.   Other operating expenses   236,400     
f.   Accumulated depreciation, equipment        188,400  
g.   Gain from settling a lawsuit        103,200  
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11/19/21, 8:45 AM Assignment Print View
h.   Cumulative effect of change in accounting principle (pre-tax)        153,000  
i.   Accumulated depreciation, buildings        404,400  
j.   Loss from operating a discontinued operation (pre-tax)   48,000       
k.   Gain on expropriation of land and building by government        69,600  
l.   Sales        2,389,200  
m.   Depreciation expense, buildings   130,800       
n.   Correction of overstatement of prior year’s sales (pre-tax)   37,200       
o.   Gain on sale of discontinued operation’s assets (pre-tax)        80,400  
p.   Loss from settling a lawsuit   58,800       
q.   Income taxes expense   ?       
r.   Cost of goods sold   1,194,000       

Required:
1. Assuming that the company’s income tax rate is 25%, what are the tax effects and after-tax measures of the items
labelled as pre-tax? (Negative answers should be indicated by a minus sign.)

25% After-Tax

Pre-tax
Tax Effect
Measure

Cumulative effect of change in accounting principle $ 153,000 $ (38,250) $ 114,750

Loss from operating a discontinued operation (48,000) 12,000 (36,000)
Correction of overstatement of prior year’s sales (37,200) 9,300 (27,900)
Gain on sale of discontinued operation’s assets 80,400 (20,100) 60,300

2. Prepare a multi-step income statement for the year ended December 31, 2020. (Amounts to be deducted should
be indicated by a minus sign in the other revenues and expenses section and the discontinued operations
section.)

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11/19/21, 8:45 AM Assignment Print View

UNILINK TELECOM CORP.

Income Statement
For Year Ended December 31, 2020
Sales   $ 2,389,200
Cost of goods sold   1,194,000
Gross profit on sales   $ 1,195,200
Operating expenses:
Depreciation expense, equipment   88,800
Depreciation expense, buildings   130,800
Other operating expenses   236,400 456,000
Operating profit   $ 739,200
Other revenues and expenses:
Interest income   30,000
Gain on expropriation of land and building   69,600
Gain from settling a lawsuit   103,200
Loss from settling a lawsuit   (58,800)
Loss on sale of office equipment   (60,600) 83,400
Profit from continuing operations before tax   822,600
Income tax expense   205,650
Profit from continuing operations   $ 616,950
Discontinued operations:
Loss from operating a discontinued operations (after-tax)   (36,000)
Gain on sale of discontinued operation’s assets (after-tax)   60,300 24,300
Profit   $ 641,250

 
Explanation:

No further explanation details are available for this problem.

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