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Homework Assignment - Chapter 9 1. Banks Corp. reported net income of $390,000 in 2012. During 2012 Banks reported a loss of $72,000 from a peripheral activity. The loss was included as part of income from continuing operations. Assuming that the loss is a onetime event and that Banks has an effective tax rate of 35% calculate Banks' adjusted net income. Show all of your calculations for credit. In addition, discuss why analysts might make an adjustment of this type. 2. Motor Corporation's income statements for the years ended December 31, 2012 and 2011 included the following information before adjustments: Operating income Gain on sale of division Provision for income taxes Net income 2012 $900,000 450,000 $1,350,000 (405,000) $945,000 2011 $600,000 0 $600,000 (180,000) $420,000 On January 1, 2012, Motor Corporation agreed to sell the assets and product line of one of its operating divisions for $1,600,000. The sale was consummated on December 31, 2012, and it resulted in a gain on disposition of $450,000. This division's pretax net losses were $320,000 in 2012 an $250,000 in 2011. The income tax rate for both years was 30%. Required: Starting with operating income (before tax), prepare revised comparative income statements for 2012 and 2011 showing appropriate details for gain (loss) from discontinued operations. 3. On November 15, 2012, Jacobs Co. sold a segment of its business for $2,750,000. The net book value of the segment at the time of its disposal was $3,000,000. Jacobs had pretax operating income of $1,750,000 for 2012 which included $380,000 earned by the discontinued segment prior to its disposal. Assume Jacobs' tax rate is 30%. Required: Prepare a partial income statement for Jacobs Co. beginning with pretax income from continuing operations