Answered step by step
Verified Expert Solution
Question
1 Approved Answer
In Quarter 2, E Corp had sales of $600,000 (6,000 items sold at $100 each). In preparation of the Quarter 2 interim report, they had
In Quarter 2, E Corp had sales of $600,000 (6,000 items sold at $100 each).
In preparation of the Quarter 2 interim report, they had the following items to consider:
- E Corp uses LIFO inventory the 6,000 items sold had a cost of $45 each. The expected replacement cost per item is estimated to be $60 each. E Corp believes they will replace 4,000 of the items before the end of the year and are hopeful to apply NIFO to value COGS.
- On the first day of quarter 2, they paid for 3 months insurance, paying $12,000.
- Annual property taxes paid on the last day of the quarter totaled $24,000.
- Annual depreciation was $68,000.
- Advertising costs of $40,000 were incurred in the last week of the quarter; $10,000 was considered toward Quarter 3.
- Salaries for the quarter are $70,000
- Annual bonus is expected to be $80,000.
- A gain was realized this quarter, totaling $140,000.
- A lawsuit against E, deemed probable and estimated at $100,000 was filed this quarter.
- E Corp incurred a major repair this quarter of $150,000.
- E Corp had pre-tax income from Quarter 1 totaling $400,000 at an average tax rate of 20%.
- E Corp estimates the revised annual tax rate to be 30%.
REQUIRED: Prepare, in decent order, the Quarter 2 income statement for E Corp, showing net income after tax. Be certain to label each line item.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started