Reference no: EM132740632

Question 1 - The records containing several transactions incurred by Forbes Corporation at December 31, 2021 showed the following balances:

Bad debts expense 2,750,000

Freight out 4,000,000

Cost of sales 46,350,000

Loss on sale of equipment 2,000,000

Loss on early retirement of long-term debt 3,000,000

Sales 97,500,000

Interest income 4,850,000

Administrative expenses 11,250,000

Finished goods inventory, January 1 60,000,000

Sales commissions 6,000,000

Finished goods inventory, December 31 55,000,000

Income tax rate 30%

What amount shall Forbes Corporation shall report as its net income for the year 2021?

a. 56,000,000 b. 30,000,000 c. 21,000,000 d. 18,000,000

Question 2 - In year 1, Casio Company provided the following information:

Sales 50,000,000

Cost of goods sold 30,000,000

Distribution costs 5,000,000

General and Administrative expenses 4,000,000

Interest expense 2,000,000

Gain on early extinguishment of long-term debt 500,000

Correction of inventory error, net of income tax-credit 1,000,000

Investment income-equity method 3,000,000

Gain on expropriation 2,000,000

Income tax expense 5,000,000

Dividends declared 2,500,000

What is the income before income tax?

a. 9,500,000 b. 14,500,000 c. 15,500,000 d. 14,000,000