Trayer Corporation has income from continuing operations of $287,200 for the yea

Question

Trayer Corporation has income from continuing operations of $287,200 for the year ended December 31, 2014. It also has the following items (before considering income taxes). An extraordinary loss of $76,300. A gain of $47,300 on the discontinuance of a division. A correction of an error in last year's financial statements that resulted in a $14,500 understatement of 2013 net income. Assume all items are subject to income taxes at a 28% tax rate. Prepare an income statement, beginning with income from continuing operations.

Explanation / Answer

Income Statement $ Income from Contiuning operation 287200 Gain on Discountiuing Operation 47300 Extra ordinary Loss -76300 Prior Period Income 14500 (understatement of Income last year) Total Income 272700 Less:- Income tax @ 28% -76356 Net Income after tax 196344

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