Question

Clayton's Dog Supplies has income before taxes of $550,000 and an extraordinary loss of $170,000. If the income tax rate is 30% on all items, the income statement should show income before irregular items and an extraordinary loss, respectively, of Question 6 options: $550,000 and ($170,000). $385,000 and ($86,700) $385,000 and ($119,000) $165,000 and ($51,000).

Answer 1

Answer: Option (c) is correct.

Step-by-step explanation:

Given that,

Income before taxes = $550,000

An extraordinary loss = $170,000

Income tax rate = 30% on all items

Income before irregular items = Income before taxes - Tax expenses

= $550,000 - $165,000

= $385,000

Extraordinary loss = Extraordinary loss - Tax saving

= $170,000 - $51,000

= $119,000