The following is a partial year-end adjusted trial balance.
Income tax expense has not yet been recorded. The income tax rate is 40%.
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| Account Title | Debits | Credits |
| Sales revenue | 390,000 | |
| Loss on sale of investments | 40,000 | |
| Interest revenue | 8,500 | |
| Cost of goods sold | 205,000 | |
| General and administrative expenses | 49,000 | |
| Restructuring costs | 59,000 | |
| Selling expenses | 29,500 | |
| Income tax expense | 0 | |
Income tax expense has not yet been recorded. The income tax rate is 40%.
Explanation:
| a. |
| Sales revenue | $ | 390,000 | |
| Less: Cost of goods sold | (205,000 | ) | |
| General and administrative expenses | (49,000 | ) | |
| Restructuring costs | (59,000 | ) | |
| Selling expenses | (29,500 | ) | |
| Operating income | $ | 47,500 | |
| b. |
| Operating income | $ | 47,500 | |
| Add: Interest revenue | 8,500 | ||
| Deduct: Loss on sale of investments | (40,000 | ) | |
| Income before income taxes | $ | 16,000 | |
| c. |
| Income before income taxes | $ | 16,000 | |
| Income tax expense (40%) | (6,400 | ) | |
| Net income | $ | 9,600 | |