In 2005, Randa Merchandising, Inc., sold its interest in a chain of wholesale outlets, taking the com-

pany completely out of the wholesaling business. The company still operates its retail outlets. A list- Income statement categories ing of the major sections of an income statement follows: w A. Income (loss) from continuing operations B. Income (loss) from operating, or gain (loss) from disposing, a discontinued segment C. Extraordinary gain (loss)

D. Cumulative effect of a change in accounting principle Indicate where each of the following income-related items for this company appears on its 2005 income statement by writing the letter of the appropriate section in the blank beside each item.

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Section 1. Net sales Item Debit Credit $2,700,000 C 2. Gain on state's condemnation of company property (net of tax) 330,000 3. Cost of goods sold $1,380,000 4. Effect of change from FIFO to LIFO (net of tax) 5. Income taxes expense A 6. Depreciation expense 7. Gain on sale of wholesale business B segment (net of tax) 8. Loss from operating wholesale business segment (net of tax) 9. Salaries expense 135,000 207,000 262,500 675,000 555,000 540,000