Trayer Corporation has income from continuing operations of $254,000 for the yea

Question

Trayer Corporation has income from continuing operations of $254,000 for the year ended December 31, 2017. It also has the following items (before considering income taxes). 1. An unrealized loss of $77,000 on available-for-sale securities 2. A gain of $27,000 on the discontinuance of a division (comprised of a $15,000 loss from operations and a $42,000 gain on disposal). 3. A correction of an error in last year's financial statements that resulted in a $10,000 understatement of 2016 net income. Assume all items are subject to income taxes at a 20% tax rate. Prepare an income statement, beginning with income from continuing operations. TRAYER CORPORATION Partial Statement of Comprehensive Income

Explanation / Answer

Solution:

Preparing an Income Satement:

TRAYER CORPORATION

Partial Statement of Comperhensive Income

For the year ended December 31, 2017

TRAYER CORPORATION

Partial Statement of Comperhensive Income

For the year ended December 31, 2017

Income from continuing operations $254,000 Discontinued operations: Gain on Discounted Division, net of $8,400 Income Taxes $33,600 Income before Extraordinary item $287,600 Extraordinary item: Extraordinary Loss, Net of $15,400 Income Tax Savings $61,600 Net Income $226,000

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