Nichol Corp. has 20,000 shares of common stock outstanding. For the year ending December 31, 2017, the company tentatively reported income from continuing operations before taxes of $320,000. Nichol Corp. has a 30 percent tax rate. The additional information given below has not been recorded in the accounts unless specifically stated.
.The company is located in Cheyenne, Wyoming. During the year, an earthquake destroyed some of Nichol's assets amounting to a loss of $120,000.
.The company's employees went on strike for six weeks in March of 2017. Revenues would have been about $23,000 more had the strike not occurred. No adjustment was recorded.
.During 2017, the company changed its method of accounting for inventories from FIFO to weighted average. Cost of goods sold related to prior years would have been $39,000 greater.
.The company's accounts include $47,000 as Unrealized Holding Gain from Trading Investments at December 31, 2017.
(a) Calculate how much should be reported on Nichol's income statement as 'Income from Continuing Operations' for the period ended December 31, 2017.
(b) How much should be reported for the year ended December 31, 2017, as 'Cumulative
Effect of a Change in Accounting Principle'?

Question

Quizplus · Accepted Answer

The Answer of Nichol Corp. has 20,000 shares of common stock outstanding. For the year ending December 31, 2017, the company tentatively reported income from continuing operations before taxes of $320,000. Nichol Corp. has a 30 percent tax rate. The additional information given below has not been recorded in the accounts unless specifically stated.
.The company is located in Cheyenne, Wyoming. During the year, an earthquake destroyed some of Nichol's assets amounting to a loss of $120,000.
.The company's employees went on strike for six weeks in March of 2017. Revenues would have been about $23,000 more had the strike not occurred. No adjustment was recorded.
.During 2017, the company changed its method of accounting for inventories from FIFO to weighted average. Cost of goods sold related to prior years would have been $39,000 greater.
.The company's accounts include $47,000 as Unrealized Holding Gain from Trading Investments at December 31, 2017.
(a) Calculate how much should be reported on Nichol's income statement as 'Income from Continuing Operations' for the period ended December 31, 2017.
(b) How much should be reported for the year ended December 31, 2017, as 'Cumulative
Effect of a Change in Accounting Principle'?