Reference no: EM132807053

The following items are from Taperline Corporation on December 31, 2008. Assume a flat 40% corporate tax rate on all items, including the casualty loss.

Sales $670,000
Rental income 3,600
Gain on the sale of fixed assets 3,000
General and administrative expenses 110,000
Selling expenses 97,000
Interest expense 1,900
Depreciation for the period 10,000
Extraordinary item (casualty loss-pre-tax) 30,000
Cost of sales 300,000
Cumulative effect of change (pre-tax) (20000)
Common stock (30,000 shares outstanding) 150,000
Provision for unusual write-offs 50,000

Required:

Problem 1: Compute the net earnings remaining after removing unusual write-offs, the extraordinary charge and cumulative effect of change in accounting principle. Remove these items net of tax.