Potter Corporation has income from continuing operations of $290,000 for the year ended December 31, 2012. It also has the following items (before considering income taxes).
1. An extraordinary loss of $80,000.
2. A gain of $30,000 on the discontinuance of a division.
3. A correction of an error in last year’s financial statements that resulted in a $20,000 understatement of 2011 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.