For the year ended December 31,2010,Running,Inc.had a pre-tax extraordinary gain of $395,000,while income before extraordinary items equaled $2,376,000.Assuming Running Inc.had no discontinued operations and an effective tax rate of 40%,the net income reported by the company was:

Question

Quizplus · Accepted Answer

To calculate the net income reported by the company, we first need to calculate the income tax expense for the pre-tax extraordinary gain:

Income tax expense = Extraordinary gain * Effective tax rate
Income tax expense = $395,000 * 40%
Income tax expense = $158,000

Next, we can calculate the net income reported by the company:

Net income = Income before extraordinary items - Income tax expense for extraordinary gain + Extraordinary gain
Net income = $2,376,000 - $158,000 + $395,000
Net income = $2,613,000

Therefore, the correct answer is B) $2,613,000.

For the Year Ended December 31,2010,Running,Inc