| The records of Johnson Corporation revealed the following income information: |
| |
Continuing operations |
$3,000,000 |
|
| |
Loss from increase in estimation of doubtful accounts expense |
(400,000) |
|
| |
Gain from a discontinued division |
200,000 |
|
| |
Loss on sale of only investment stock held since 1980 |
(500,000) |
|
| |
Gain from cashing in a life insurance policy of the retiring CEO |
350,000 |
|
| |
Loss from flood due to heavy rain |
(650,000) |
|
| |
Gain from change in accounting method (LIFO to FIFO) |
500,000 |
|
| |
Total |
$2,500,000 |
|
| Additional information is as follows: |
| |
1. The company has a marginal tax rate of 40%. |
| |
2. Johnson Company has 100,000 shares of stock outstanding. |
| |
3. Johnson Company paid $600,000 in dividends to its preferred
shareholders at year-end. |
| |
 |
| Instructions: |
| a. |
Compute the total tax expense. (Answer) |
| b. |
Compute of income from continuing operations before taxes. (Answer) |
| c. |
Complete the lower portion of the income statement. (Answer) |
| d. |
Compute earnings per share. (Answer) |
