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In addition, Kell paid $48,000 on February 1, 20X5, for 20X5 calendar-year property taxes. Of this amount, $12,000 was allocated to the third quarter of 20X5. For the quarter ended September 30, 20X5, Kell should report net income of:

User Led
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6 votes

Answer:

87,000 dollars.

Step-by-step explanation:

For the 95,000 income we should make the following adjustment:

The extraordinary gain has a portion that correspond to fourth quarter so we should remove it:

60,000 / 3 = 20,000 per quarter

The property taxes include a portion that occurs over the fourth quarter we should remove it as well:

48,000 / 4 = 12,000

therefore the net income should be:

95,000 - 20000 + 12000 = 87,000

NOTE MISSING INFORMATION

Kell Corp.'s $95,000 net income for the quarter ended September 30, 20X5, included the following after-tax items:

A $60,000 extraordinary gain, realized on April 30, 20X5, was allocated equally to the second, third, and fourth quarters of 20X5.

A $16,000 cumulative-effect loss resulting from a change in inventory method was recognized on August 2, 20X5.

In addition, Kell paid $48,000 on February 1, 20X5, for 20X5 calendar-year property taxes. Of this amount, $12,000 was allocated to the third quarter of 20X5.

User Ncoghlan
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