A review of the December 31, 2010, financial statements of Somer Corporation revealed

that under the caption "extraordinary losses," Somer reported a total of $515,000.
Further analysis revealed that the $515,000 in losses was comprised of the
following items:

(1) Somer recorded a loss of $150,000 incurred in the abandonment of

equipment formerly used in the business.
(2) In an unusual and infrequent occurrence, a loss of $250,000 was sustained as
a result of hurricane damage to a warehouse.
(3) During 2010, several factories were shut down during a major strike by
employees, resulting in a loss of $85,000.
(4) Uncollectible accounts receivable of $30,000 were written off as
uncollectible.
Ignoring income taxes, what amount of loss should Somer report as extraordinary
on its 2010 income statement?

a. $150,000.
b. $250,000.
c. $400,000.
d. $515,000.

$515,000 – $150,000 – $85,000 – $30,000 = $250,000.

Use the following information for questions 29 and 30.

At Ruth Company, events and transactions during 2010 included the following. The tax rate
for all items is 30%.
(1) Depreciation for 2008 was found to be understated by $30,000.
(2) A strike by the employees of a supplier resulted in a loss of $25,000.
(3) The inventory at December 31, 2008 was overstated by $40,000.
(4) A flood destroyed a building that had a book value of $500,000. Floods are very
uncommon in that area.

29. The effect of these events and transactions on 2010 income from continuing
operations net of tax would be

a. $17,500.
b. $38,500.
c. $66,500.
d. $416,500.

$25,000 – $7,500 = $17,500.

30. The effect of these events and transactions on 2010 net income net of tax would be
a. $17,500.
b. $367,500.
c. $388,500.
d. $416,500.

$17,500 + ($500,000 × .7) = $367,500.