East Company, a Highly Diversified Corporation, Reports the Results of Operations

Essay

East Company, a highly diversified corporation, reports the results of operations quarterly.At the beginning of the third quarter, management decided to discontinue its recreational division.At this time, a formal plan was authorized, calling for disposal by year end.Results for the current year, excluding taxes, are as follows:
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$$\begin{array} { l r r } \text { Quarter } & \begin{array} { c } \text { Continuing } \\\text { Operations }\end{array} &{ \begin{array} { c } \text { Discontinued } \\\text { Segment }\end{array} } \\\hline \text { First } & \$ 33,000 & \\\text { Second } & 40,200 & \\\text { Third } & 62,000 & \$ ( 6,500 ) \\\text { Fourth } & 71,500 & 1,200\end{array}$$ The following additional information was provided:
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a.The first two quarters include results of operations of the discontinued segment.The segment reported first and second quarter pretax losses of $8,000 and $12,000, respectively.?
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b.The estimated annual income tax rate in the first and second quarters was 35%.Because of the decision to discontinue, the revised annual effective tax rate was determined to be 40%.?
Required:
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For each quarter, present the results of operations and the related tax expense or tax benefit.Where applicable, include the original and restated amounts in the presentation.