Question

Misty Company reported the following before-tax items during the current year:Sales revenue $ 600Selling and administrative expenses 250Restructuring charges 20Loss on discontinued operations 50Misty's effective tax rate is 40%.What is Misty's income from continuing operations?
(A) $198
(B) $330.(C) $210.(D) $360.

Answer 1

Answer:

                                                               $

Sales revenue                                      600

Selling and administrative expenses (250)

Restructuring charges                          (20)

Profit before tax                                    330

Tax @ 40%                                             132

Income from continuing operations     198

The correct answer is A

Explanation:

Income from continuing operation is the excess of sales revenue over selling and administrative expenses, restructuring charges and tax.

Tax is 40% of profit before tax.