Sovereign Foods suffered a $1,500,000 loss when the FDA prohibited the sale of food products containing red dye no. 3. On its other products, Sovereign Foods had sales of $6,580,000 and costs and other expenses of $6,505,000. Which of the following statements is true? (Ignore taxes) A. Sovereign Foods shows the $1,500,000 loss in a separate line of the income statement after income from continuing operations. B. Sovereign Foods reports a net loss of $1,425,000 for the current year. C. Sovereign Foods reports income from continuing operations of $75,000. D. Sovereign Foods combines the $1,500,000 loss with its other costs and expenses of $6,505,000, since this item does not qualify for any special d

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In the current year, Randa Merchandising Incorporated sold its interest in a chain of wholesale outlets, taking the company completely out of the wholesaling business. The company still operates its retail outlets. A listing of the major sections of an income statement follows. Item 1. 2. 3. 4. 5. 6. 7. 8. 1. Net sales 2. Gain on state's condemnation of company property 3. Cost of goods sold 4. Income tax expense 5. Depreciation expense 6. Gain on sale of wholesale business segment, net of tax 7. Loss from operating wholesale business segment, net of tax 8. Loss of assets from meteor strike Exercise 13-17A (Algo) Income statement categories LO A2 Debit Section $ 1,888,000 277,000 296,000 566,000 817,000 Credit $ 3,700,000 293,000 Indicate where each of the following income-related items for this company appears on its current year income statement by selecting the appropriate section in the drop down beside each item. 989,000 Item Net sales Gain on state's condemnation of company…

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4. Hendrix Car Parts, Inc. has working capital of $450,000, but wishes to justify more to avoid exposure to the accumulated earnings tax. The following facts are known about the business: Cost of goods sold Accounts payable Net sales Purchases Inventory Accounts receivable $1,350,000 250,000 1,720,000 920,000 550,000 370,000 510,000 Miscellaneous expenses (including taxes of $66,000 and depreciation of $92,000) May Hendrix Car Parts, Inc. justify an increase in working capital? Hendrix has $143,000 of accumulated earnings tax payable. Using the maximum reasonable needs of the business that can be established for the year, at what after-tax income would the AET disappear?