Question : 8.Nigel Corporation reported income from continuing operations before taxes and : 1253540

 

8.Nigel Corporation reported income from continuing operations before taxes and before adjustment of the transactions below in the amount of $1,000,000. A review of the 2009 income statement revealed several items that appeared to be incorrectly categorized. The following items were flagged:

a.Recorded a loss of $29,000 due to a vandalism attack by a gang on one of the company warehouses; vandalism attacks have occurred at least once per year since the company began operations

b.Incurred an unusual and infrequent hurricane loss of $41,000 to a company warehouse

c.Closed all five of the company’s supermarkets in Manhattan after bag boys went on strike for an extended period of time; shutdown expenses totaled $38,000

d.Floods from overflowing toilets on the upper floors of a downtown office building in Denver caused more than $8 million in repairs. Flooding toilets are rare in this area and have never occurred in office buildings in Denver before. Insurance coverage paid $8.6 million to replace the damaged portions of the building.

Nigel has a 30% tax rate. Calculate income from continuing operations. For any item that is NOT a component of continuing operations, state how it would be reported.

 

 

 

 

 

 

 

 

 

 

 

 

 

9.On January 1, total assets and liabilities were $21,000 and $8,000, respectively. On December 31, total assets and liabilities were $30,000 and $7,000, respectively. During the year, $9,000 of dividends were declared and paid and $3,000 of stock was issued. Calculate net income for the year.

 

 

 

 

 

 

 

 

 

 

 

10.On January 1 and December 31, 2010, retained earnings were $23,000 and $42,000, respectively. During the year, the only dividends were an ordinary stock dividend recorded at $11,000. Calculate net income for 2010.

 

 

 

 

 

 

 

 

 

11.Cabell Inc. reported ‘income from operations before taxes’ in the amount of $402,000 before including the following items for the year ending December 31, 2009:

                         On December 31, 2009, borrowed long-term debt of $50,000 that limits dividends to 10 percent of net income from continuing operations

                         $21,000 unrealized gain from fair value adjustment related to available-for-sale investments

                         $30,000 loss recognized on the sale of a trading security

                         $58,000 loss recognized on a lawsuit relating to patent violations

                         $11,000 government fine for environmental violation

                         $63,000 write-down of obsolete inventory

                         $25,000 loss on the early retirement of debt.

The company’s income tax rate is 30 percent. No taxes have been considered in any information provided. Prepare a calculation of income from operations starting with income from operations before taxes, as tentatively reported. Omit the heading. Be sure to label correctly.