Question

The following information pertains to Maynard Corporation’s income statement for the 12 months just ended. The company has an effective income tax rate of 40%.Discontinued operations $70,000Extraordinary loss due to earthquake 90,000Income from continuing operations (net of tax) 72,000Cumulative effect of change in accounting principle 60,000Maynard’s net income for the year is:A. $8,000B. $24,000C. $12,000D. $36,000

Answer 1

(B) $24000

Step-by-step explanation:

Calculate Maynard income for the year

Income from continued operations

(net of tax) .... $72000

Discontinued operation - $70,000 -> 0.40 = $42,000

Extraordinary loss due to earthquake - $90,000 -> 0.40 = $54,000

Net income = $54,000 + $42,000 - $72,000 = $24,000