Colby Corporation has provided the following information: • Operating revenues from customers were $199,700.
• Operating expenses for the store were $111,000.
• Interest expense was $9,200.
• Gain from sale of plant and equipment was $3,300.
• Dividend payments to Colby's stockholders were $7,700.
• Income tax expense was $36,000.
• Prepaid rent was $5,000.
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What is the amount of Colby's income before income taxes?
A)$70,100.
B)$75,100.
C)$82,800.
D)$92,000.

Question

Quizplus · Accepted Answer

Operating revenues - Operating expenses = $199,700 - $111,000 = $88,700
Add: Gain from sale of plant and equipment = $3,300
Subtract: Interest expense = $9,200
Subtract: Income tax expense = $36,000
Subtract: Dividend payments = $7,700
Add: Prepaid rent is not relevant to income before income taxes
$88,700 + $3,300 - $9,200 - $36,000 - $7,700 = $39,100
Therefore, Colby's income before income taxes is $39,100.
However, this answer does not match any of the options given. The closest option is option C, which is $82,800, but that answer is incorrect based on the calculations.

Colby Corporation Has Provided the Following Information: • Operating Revenues