Exercise 14-13 Trayer Corporation has income from continuing operations of $270,

Question

Exercise 14-13 Trayer Corporation has income from continuing operations of $270,000 for the year ended December 31, 2017. It also has the following items (before considering income taxes) 1. 2. 3. An unrealized loss of $87,000 on available-for-sale securities A gain of $40,000 on the discontinuance of a division (comprised of a $10,000 loss from operations and a $50,000 gain on disposal) A correction of an error in last year's financial statements that resulted in a $17,000 understatement of 2016 net income Assume all items are subject to income taxes at a 18% tax rate. Prepare an income statement, beginning with income from continuing operations. TRAYER CORPORATION Partial Statement of Comprehensive Income

Explanation / Answer

Trayer Corporation

Income Statement for the year ended December 31, 2017

a) Income from continuing operations

Discontinued operations

Income from operations, net of income tax $2,21,400

Loss from discontinuance of a division-net of tax (8,200)

Gain on disposal-net of tax 41,000

Income before Extraordinary item 2,54,200

Extraordinary item

Unrealized loss on available sale securities-net of tax (71,340)     

NET INCOME $ 1,82,860

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