LeBron's Bookstores has two divisions: media and books.The media division had another great year with net sales of $14 million,cost of goods sold of $8 million,operating expenses of $3 million,and income tax expense of $900,000.The book division did not do as well and was sold during the year.The loss from operations and sale of the book division was $400,000 before taxes and $280,000 after taxes.Assuming the sale of the book division is reported as a discontinued operation,at what amount did LeBron's Bookstores report net income?
A)$3,000,000.
B)$1,820,000.
C)$2,100,000.

Question

Quizplus · Accepted Answer

To calculate the net income of LeBron's Bookstores, we need to add the income from the media division and subtract the loss from the book division.

Income from the media division: 
Net sales - Cost of goods sold - Operating expenses - Income tax expense 
= $14 million - $8 million - $3 million - $900,000 
= $2.1 million

Loss from the book division: 
Loss before taxes - Income tax expense 
= $400,000 - $280,000 
= $120,000

Therefore, the net income of LeBron's Bookstores is: 
$2.1 million - $120,000 = $1.98 million

However, since the book division is reported as a discontinued operation, we need to show it separately on the income statement. So the net income after reporting discontinued operations is:

Income from media division: $2.1 million 
Loss from book division (after taxes): $280,000 
Net income: $1.82 million

Therefore, the best choice is B.

LeBron's Bookstores Has Two Divisions: Media and Books