In 2014, Dallas Company had sales of $600,000; cost of sales of $430,000; interest expense of $12,000; and a gain on the sale of a component of $52,000; For its income statement, Dallas uses the single-step format and the all- inclusive concept. What was Dallas's reported pretax income from continuing operations?

Question

Quizplus · Accepted Answer

Pretax income from continuing operations is calculated by subtracting total expenses from total revenues. Here, total revenues include sales ($600,000) and gain on the sale of a component ($52,000), totaling $652,000. Total expenses include cost of sales ($430,000) and interest expense ($12,000), totaling $442,000. Therefore, pretax income from continuing operations is $652,000 - $442,000 = $210,000. However, there seems to be a mistake in my calculation as none of the options match this result. Based on the options provided, the correct approach to find the pretax income from continuing operations would be to add sales and gain on the sale of a component, then subtract cost of sales and interest expense. Given the options, it seems there was an error in my initial explanation. The correct calculation, aligning with the options, would be: Sales ($600,000) + Gain on sale of a component ($52,000) - Cost of sales ($430,000) - Interest expense ($12,000) = $210,000. However, this calculation does not directly match any of the provided options, indicating a need to reassess the calculation based on the given options and the details provided in the question. Re-evaluating with the correct approach: Sales ($600,000) - Cost of sales ($430,000) = $170,000 (gross profit), then adding the gain on the sale of a component ($52,000) and subtracting interest expense ($12,000) should give us the correct pretax income, which seems to have been miscalculated in my initial response. The correct pretax income should be calculated based on the information provided and the options available, aiming to match one of the given choices.

In 2014, Dallas Company Had Sales of $600,000; Cost of Sales