Milano Company had several unusual transactions during 1990 and has prepared the following list of trial balance items from which the appropriate items should be selected and used in constructing the 1990 income statement for the company.

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Prepare Milano Company's income statement for 1990, excluding the earnings per share statistics.
Problem 13-5A Changes in accounting principles

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Debit Credit Depreciation expense. Income from operations of Maz Division (net of $9,000 income taxes). Sales Cost of goods sold Gain on sale of artwork in company offices (an unusual transaction for the company that occurs only when major redecorations are required and expensive new artwork is purchased, which happens about every five to seven years) Loss on a patent infringement suit. (This patent is essential to the operations of the business and it is not unusual for companies in this industry to be involved in patent infringement suits. However, the lawsuit appears to have settled the matter in this case and the problem is not expected to arise in the foreseeable future.). Income tax expense. Gain on payment from supplier to compensate for loss of customers who had been sold products containing inferior materials purchased from the supplier. (In this industry, such settlements with suppliers occur quite frequently.) Maintenance expense costs (net of $7,500 income taxes) incurred in late December of last year and incorrectly charged to building Gain on sale of investment in stock (the stock was originally donated to Milano by an elderly stockholder and was held out of courtesy until that stockholder's death. Milano has never held stock investments before and has no intention of doing so in the future.) (net of $10,500 income taxes). $ 21,900 131,100 210,000 54,900 $ 22,500 438,000 48,750 36.000 18,150 Accumulated depreciation, buildings 65,700 54,000 Loss on sale of Maz Division (net of $13,200 income taxes) Interest earned. . 31,500 5,250 Other operating expenses 108,450 Effect on prior years' income of switching from accelerated depreciation to straight-line depreciation (net of $28,000 income taxes). Estimated product warranty liability. 70,500 34,500