On December 31, 2016, the end of the fiscal year, California Microtech Corporation completed the sale of its semiconductor business for $17 million. The business segment qualifies as a component of the entity according to GAAP. The book value of the assets of the segment was $16 million. The loss from operations of the segment during 2016 was $4.6 million. Pretax income from continuing operations for the year totaled $6.7 million. The income tax rate is 30%. Prepare the lower portion of the 2016 income statement beginning with pretax income from continuing operations. Ignore EPS disclosures.

On December 31, 2016, the end of the fiscal year, California Microtech Corporation completed the sale of its semiconductor business for $17 million. The business segment qualifies as a component of the entity according to GAAP. The book value of the assets of the segment was $16 million. The loss from operations of the segment during 2016 was $4.6 million. Pretax income from continuing operations for the year totaled $6.7 million. The income tax rate is 30%.

Prepare the lower portion of the 2016 income statement beginning with pretax income from continuing operations. Ignore EPS disclosures.

 

Explanation:

Income tax expense = $6,700,000 × 30% = $2,010,000

Loss from operations of discontinued component:

 

Gain on sale of assets	$	1,000,000		($17 million less $16 million)
Loss from operations		(4,600,000	)
Total before-tax loss	$	(3,600,000	)

The following is a partial year-end adjusted trial balance. Account Title Debits Credits Sales revenue 390,000 Loss on sale of investments 40,000 Interest revenue 8,500 Cost of goods sold 205,000 General and administrative expenses 49,000 Restructuring costs 59,000 Selling expenses 29,500 Income tax expense 0 Income tax expense has not yet been recorded. The income tax rate is 40%.

The following is a partial year-end adjusted trial balance.

Account Title	Debits	Credits
Sales revenue		390,000
Loss on sale of investments	40,000
Interest revenue		8,500
Cost of goods sold	205,000
General and administrative expenses	49,000
Restructuring costs	59,000
Selling expenses	29,500
Income tax expense	0

Income tax expense has not yet been recorded. The income tax rate is 40%.

Explanation:

a.

Sales revenue	$	390,000
Less: Cost of goods sold		(205,000	)
General and administrative expenses		(49,000	)
Restructuring costs		(59,000	)
Selling expenses		(29,500	)
Operating income	$	47,500

b.

Operating income	$	47,500
Add: Interest revenue		8,500
Deduct: Loss on sale of investments		(40,000	)
Income before income taxes	$	16,000

c.

Income before income taxes	$	16,000
Income tax expense (40%)		(6,400	)
Net income	$	9,600

The following is a December 31, 2016, post-closing trial balance for the Jackson Corporation.

The following is a December 31, 2016, post-closing trial balance for the Jackson Corporation.

Account Title	Debits		Credits
Cash	47,000
Accounts receivable	41,000
Inventories	82,000
Prepaid rent	23,000
Marketable securities (short term)	17,000
Machinery	180,000
Accumulated depreciation—machinery			18,000
Patent (net of amortization)	86,000
Accounts payable			11,500
Wages payable			7,500
Taxes payable			39,000
Bonds payable (due in 10 years)			210,000
Common stock			100,000
Retained earnings			90,000
Totals	476,000		476,000

Required:

Prepare a classified balance sheet for Jackson Corporation at December 31, 2016. (Amounts to be deducted should be indicated by a minus sign.)

The following are the typical classifications used in a balance sheet: a. Current assets f. Current liabilities b. Investments and funds g. Long-term liabilities c. Property, plant, and equipment. h. Paid-in-capital d. Intangible assets i. Retained earnings e. Other assets Required: For each of the following balance sheet items, use the letters above to indicate the appropriate classification category. (If the item is a contra account, select the appropriate letter with a minus sign.)

The following are the typical classifications used in a balance sheet:

a.	Current assets	f.	Current liabilities
b.	Investments and funds	g.	Long-term liabilities
c.	Property, plant, and equipment.	h.	Paid-in-capital
d.	Intangible assets	i.	Retained earnings
e.	Other assets

Required:

For each of the following balance sheet items, use the letters above to indicate the appropriate classification category. (If the item is a contra account, select the appropriate letter with a minus sign.)

For each of the following note disclosures, indicate whether the disclosure would likely appear in (A) the summary of significant accounts policies or (B) a separate note.

For each of the following note disclosures, indicate whether the disclosure would likely appear in (A) the summary of significant accounts policies or (B) a separate note.