Response to the following problem:
The income statement of Rawl Company for the year ended December 31, 2012, shows the following:
Net sales $360,000
Cost of sales 190,000
Gross profit 170,000
Selling, general, and administrative expense 80,000
Income before unusual write-offs 90,000
Provision for unusual write-offs 50,000
Earnings from operations before income taxes 40,000
Income taxes 20,000
Net earnings from operations before extraordinary charge 20,000
Extraordinary charge, net of tax of $10,000 (50,000)
Net earnings (loss) $ (30,000)
Required:
Compute the net earnings remaining after removing unusual write-offs and the extraordinary charge. Remove these items net of tax. Estimate the tax rate for unusual write-offs based on the taxes on operating income.