156 SU4 Income Statement Nems Income Statement Authoritative Literature Help Pucket Corp. Is in the process of preparing its financial statements for the year ended December 31, Year 4. Before closing the books, prepared the folowing: Condensed Trial Balance December 31, Year 4 Total assets Total iabilities Common stock Additional paid-in capital Donated capital Retained eamings, 1/1Year 4 1,700000 1,250,000 2,097,500 90,000 1,650,000 Net sales Cost of sales Selling and administrative expenses Interest expense Gain on sale of long-term investments Income tax expense Loss on disposition of plant assets Loss due to earthquake damage 3,750,000 1212,500 122,500 130,000 300,000 225,000 475.000 13 167 50 13. 167 Other financial data for the year ended December 31, Year 4: Sales returns and allowances equaled $215,000, and sales discounts taken were $96,000 Estimated federal income tax payments were $200,000, and accrued federal income taxes equaled $100,000. The total charged to income tax expense does not properly relect current or delerred income tax expense or interperiod income tax allocation for income statement purposes. The enacted tax rate on all types of taxable income forthe ament and futuro years is 30%. The alternative minimum tax is loss than te reglar income tax. Interest expense indudes 6% interest on 2 year bonds issued at their face amount of $1,500,000. . A $90,000 excess of carrying amount over tax basis in depreciable assets arose from receipt of a contribution of equipment by a local govenment on December 31, Year4. It is expected to be depreciated over 5 years beginning in Year 5. There were no temporary differences prior to Year 5 Officers' lfe insurance expense (not tax deductble) is $70,000. The earthquake damage is considered unusual and infrequent, but the disposition of plant assets is considered infrequent but not unusual. Moreover, the disposition of plant assets was not a disposal of a component of an entity . The shares of common stock ($5 par) traded on a national exchange: Outstanding at 1/HYear 4 Issued on 33Year 4 as a 10% stock dividend Issued shares for $25 per sharp on 6/30/Year 4 200,000 20,000 30,000 Outstanding at 1231/Year4 Pucket declared a $1.25 common skok dvidend on December 28, Year 4. -Continued on next page- Scanned with CamScanner SU 4: Income Statement Items 157 income Statement Authoritative Literature Holp-Continued the information from the previous page, enter in the shaded cells the correct amounts for For the Year Ended December 31, Year 4 Net sales Cost of sales Gross proft Selling and administrative expenses Income from operations Other revenues and gains: Gain on sale of long-term investments Other expenses and losses: Interest expense Loss on disposition of plant assots Income from continuing operations before income tax Income tax expense: Current tax expense Deferred tax expense Income before extraordinary item 1em-loss from earthquake (net of applicable taxos) Net income