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For the year ending December 31, 2020, income from continuing operations before-tax was $875,000 before considering the following transactions and events. All items below are
For the year ending December 31, 2020, income from continuing operations before-tax was $875,000 before considering the following transactions and events. All items below are presented before taxes and should be considered material. The tax rate is 30%.
In December, the company sold a warehouse for $67,000. The warehouse was originally purchased for 75,000, and had been depreciated $21,000 to date.
At year end, the company discovered it had failed to report revenues from inventory sold by a consignee on its behalf for the last three years. Revenue from consignment sales totaled $50,000 in 2018, $100,000 in 2019 and $118,000 in 2020.
The company shifted its strategy towards growing its west coast business. As a result, the company began to sell off its East Coast division during the year and netted a $38,000 gain. The East Coast division reported a loss from operations during the year of $360,000.
Historically, the company had determined that warranty costs amounted to approximately 3% of sales revenue, and as a result $45,000 of warranty expense is included in the income from continuing operations above. At year end, the company updated its analysis and adjusted this percentage to 4% or $60,000 of warranty expense.
Determine Net Income for the year ended December 31, 2020
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