Question

The Compton Press Company reported income before taxes of $250,000. This amount included a $50,000 extraordinary loss. The amount reported as income before extraordinary items, assuming a tax rate of 40%, is:

Answer 1

The income before extraordinary items, assuming a tax rate of 40%, is $200,000 and the income before extraordinary items after taxes is $80,000.

Step-by-step explanation:

The income before extraordinary items can be calculated by subtracting the extraordinary loss from the income before taxes. In this case, the income before taxes is $250,000 and the extraordinary loss is $50,000. Therefore, the income before extraordinary items is $250,000 - $50,000 = $200,000.

To calculate the income before extraordinary items after taxes, we need to multiply the income before extraordinary items by the tax rate of 40%. Therefore, the income before extraordinary items after taxes is $200,000 * 0.40 = $80,000.