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Income tax expense has not yet been recorded. The income tax rate is 25%. a. Determine the operating income (loss). b. Determine the income (loss) before income taxes. c. Determine the net income (loss).

Answer :

Answer:

a. $70,000

b. $24,000

c. $18,000

Explanation:

The computation is shown below:

a. Operating income or loss:

= Sales - cost of goods sold - General and Administration cost - Restructuring cost - Selling Expense

= $450,000 - $235,000 - $55,000 - $57,500 - $32,500

= $70,000

b. Income (loss) before income taxes:

= Operating income - loss on sale of investment + interest revenue

= $70,000 - $52,000 + $6,000

= $24,000

c. Net income or loss

= Income before income taxes - income tax expense

= $24,000 - $24,000 × 25%

= $24,000 - $6,000

= $18,000

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