Ex. 212
Windsor Corporation had the information listed below available in preparing an income statement for the year ended December 31, 2011. All amounts are before income taxes. Assume a 30% income tax rate for all items.
Sales$ 600,000
Expropriation of property by a foreign government (loss)$ (90,000)
Income from operation of discontinued cement division$ 100,000
Loss from disposal of cement division$ (80,000)
Operating expenses$ 125,000
Gain on sale of equipment$ 65,000
Cost of goods sold$ 420,000
Instructions
Prepare a multiple-step income statement in good form which takes into account intraperiod income tax allocation. Ignore EPS computations.
Ex. 213
Indicate whether the following items would be reported as an ordinary or an extraordinary item in Maris Corporation's income statement.
(a)Loss attributable to labor strike.
(b)Gain on sale of fixed assets.
(c)Loss from fire. Logan is a chemical company.
(d)Loss from sale of short-term investments.
(e)Expropriation of property by a foreign government.
(f)Loss from tornado damage. Maris Corporation is located in the Midwest's tornado alley.
(g)Loss from government condemnation of property through newly enacted law.
Ex. 214
Milton Company has income from continuing operations of $480,000 for the year ended December 31, 2011. It also has the following items (before considering income taxes):
(1)An extraordinary fire loss of $150,000.
(2)A gain of $90,000 on the discontinuance of a major segment.
(3)A correction of an error in last year's financial statement that resulted in a $70,000 overstatement of 2010 net income.
Assume all items are subject to income taxes at a 30% tax rate.
Instructions
(a)Prepare an income statement, beginning with income from continuing operations.
(b)Indicate the statement presentation of any item not included in (a) above.