Selected account balances from the adjusted trial balance for Olinda Corporation as of its calendar yearend December 31, 2017, follow.
a. Interest revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \( 14,000
b. Depreciation expense—Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \) 34,000
c. Loss on sale of equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,850
d. Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44,000
e. Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106,400
f. Accumulated depreciation—Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71,600
g. Gain from settlement of lawsuit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44,000
h. Accumulated depreciation—Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174,500
i. Loss from operating a discontinued segment (pretax) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,250
j. Gain on insurance recovery of tornado damage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000
k. Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 998,000
l. Depreciation expense—Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52,000
m. Correction of overstatement of prior year’s sales (pretax) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,000
n. Gain on sale of discontinued segment’s assets (pretax) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,000
o. Loss from settlement of lawsuit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,250
p. Income taxes expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ?
q. Cost of goods sold............................................................... 482,500
Required
Answer each of the following questions by providing supporting computations.
1. Assume that the company’s income tax rate is 30% for all items. Identify the tax effects and after-tax amounts of the three items labeledpretax.
