Question

"96. Logan Corp.'s trial balance of income statement accounts for the year ended December 31, 2017 included the following:

Debit Credit
Sales revenue $280,000
Cost of goods sold $170,000
Administrative expenses 40,000
Loss on sale of equipment 18,000
Commissions to salespersons 16,000
Interest revenue 10,000
Freight-out 6,000
Loss from discontinued operations 24,000
Bad debt expense 6,000
Totals $280,000 $290,000

Other information:
Logan's income tax rate is 30%. Finished goods inventory:
January 1, 2017 $160,000
December 31, 2017 140,000

On Logan's multiple-step income statement for 2017, the discontinued operations loss is
a. $16,800.
b. $24,000.
c. $29,400.
d. $42,000."

Answer 1

The loss from discontinued operations to be reported on Logan Corp.'s income statement for 2017 is $24,000. This is before considering the tax effect.

Step-by-step explanation:

The question relates to how a discontinued operations loss is reported on a multi-step income statement. Logan Corp. has a loss from discontinued operations of $24,000. This figure will appear on the income statement as a separate component after income from continuing operations and before the income tax effect is considered. To find the loss included on the income statement after accounting for income taxes, you would calculate the tax effect (30% of $24,000) and subtract it from the loss. However, the question doesn't ask for the net loss from discontinued operations, but rather for how the gross amount should appear. Therefore, the correct answer to the question is that the loss from discontinued operations reported on Logan's income statement for 2017 would be $24,000.