Wray Company has income before income taxes of $350,000 and a loss on disposal of a discontinued operation of $70,000. If the income tax rate is 30%, the income statement should show "Income from continuing operations" and "Loss on disposal of discontinued operation", respectively, of: Select one: a. $350,000 and ($49,000) b. $350,000 and ($70,000) c. $245,000 and ($70,000) d. $245,000 and ($49,000)

d. $245,000 and ($49,000)

Explanation:

To answer this we would have to account for taxes on both the Income from Continuing Operations and Loss on disposal of discontinued operation.

It is worthy of note that a LOSS on disposal of discontinued operation has a TAX BENEFIT.

Calculating the Income from continuing operations

= 350,000* (1 - 0.3)

= $245,000

Loss on discontinued operations

= 70000* (1 - 0.3)

= (49,000)

Correct answer is therefore option d. $245,000 and ($49,000)

If you need any clarification do react or comment.

i guess you could put raise the economic balance

i might look it up later.