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10 November, 01:11

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).

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  1. 10 November, 01:16
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    Answer: Option (c) is correct.

    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
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