B is corrent. All of the accounts given in the trial balance are components of income from operations before income tax except for the adjustment due to loss on discontinued operation and the extraordinary loss. The discontinued operation ($40,000) is reported, net of tax, as a separate component of income after income from operations. The extraordinary loss is presented (net of taxes) after income from operations. Therefore, income from operations before income tax is $230,000, as computed below.
A is incorrect. All of the accounts given in the trial balance are components of income from operations before income tax except for the adjustment due to loss on discontinued operation and the extraordinary loss. The discontinued operation ($40,000) is reported, net of tax, as a separate component of income after income from operations. The extraordinary loss is presented (net of taxes) after income from operations. Therefore, income from operations before income tax is $230,000, as computed below.
A is incorrect. All of the accounts given in the trial balance are components of income from operations before income tax except for the adjustment due to loss on discontinued operation and the extraordinary loss. The discontinued operation ($40,000) is reported, net of tax, as a separate component of income after income from operations. The extraordinary loss is presented (net of taxes) after income from operations. Therefore, income from operations before income tax is $230,000, as computed below.
A is incorrect. All of the accounts given in the trial balance are components of income from operations before income tax except for the adjustment due to loss on discontinued operation and the extraordinary loss. The discontinued operation ($40,000) is reported, net of tax, as a separate component of income after income from operations. The extraordinary loss is presented (net of taxes) after income from operations. Therefore, income from operations before income tax is $230,000, as computed below.
