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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 $34,000. The warehouse was originally purchased for 66,000, and had been depreciated $21,000 to date. At year end, the company discovered it had mistakenly reported both sales revenue and commission revenue from inventory it sold as a consignee on behalf of a consignor for the last three years. Revenue from consignment sales totaled $60,000 in 2018, $110,000 in 2019 and $180,000 in 2020. The 2020 amount is included in the income from continuing operations amount above. 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 $36,000 loss. The East Coast division reported income from operations during the year of $380,000. Historically, the company had determined that warranty costs amounted to approximately 4% of sales revenue, and as a result $50,000 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 3% or $37,500 of warranty expense. Determine Net Income for the year ended December 31, 2020 and enter your answer in the box.
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 $34,000. The warehouse was originally purchased for 66,000, and had been depreciated $21,000 to date.
At year end, the company discovered it had mistakenly reported both sales revenue and commission revenue from inventory it sold as a consignee on behalf of a consignor for the last three years. Revenue from consignment sales totaled $60,000 in 2018, $110,000 in 2019 and $180,000 in 2020. The 2020 amount is included in the income from continuing operations amount above.
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 $36,000 loss. The East Coast division reported income from operations during the year of $380,000.
Historically, the company had determined that warranty costs amounted to approximately 4% of sales revenue, and as a result $50,000 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 3% or $37,500 of warranty expense.
Determine Net Income for the year ended December 31, 2020 and enter your answer in the box.
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