Question

Leigh Corp. disposed of its Knit Products Division in June of 2020 at a loss of $19,000 before tax. Prior to the sale, the Knit Products Division (considered a separate business component) reported a net loss from operations of $202,500 before tax. Leigh Corp. reported income from continuing operations of $450,000 before tax for 2020. a. Assuming an income tax rate of 25%, prepare an income statement beginning with Income from Continuing Operations. Ignore earnings per share disclosures.

Answer 1

Answer:

                                 Leigh Corp.

   Income Statement for the year ended MM DD, YY

Income from continuing operations before tax $450,000

Less: Tax 25% (450,000 x 25%)                         $180,000

Income from continuing operations after tax     $270,000

Loss from discontinuing operation                     ($19,000)

Loss from sale of discontinuing operation         ($202,500)

Total Comprehensive Income                              $48,500