Question

For the year just ended, Fellups, Inc., had income before income taxes of $275,000 from its normal, recurring operations. In addition, during the year, a tornado damaged one of the company’s warehouses and its contents. Tornado damage is quite rare in Fellups’s location. The estimated amount of the loss from the tornado is $100,000. The tax rate on all of the above is 40 percent. Prepare the final section of Fellups’s income statement, beginning with income before income taxes.

Answer 1

Answer is given below

Income Statement Income From continuing Operations Less: Loss from Tornado Income before tax Less: Income tax 40% Income After Tax $100,000 $175,000 $70,000 $105,000