Alpha Surrey Inc.

Income Statement

December 31, 2020

Sales revenue............................................................................................................................................... $975,000

Investment revenue....................................................................................................................................... 19,500

Cost of merchandise sold...................................................................................................................... (408,500)

Selling expenses......................................................................................................................................... (155,000)

Administrative expenses....................................................................................................................... (215,000)

Interest expense.......................................................................................................................................... (13,000)

Income before special items.................................................................................................................... 203,000

Special items

Loss on disposal of a segment of the business....................................................................... (30,000)

Major fire loss...................................................................................................................................... (80,000)

Net income tax liability............................................................................................................................ (27,900)

Net income.................................................................................................................................................... $ 65,100

Instructions

Prepare a multi-step Income Statement based on the data provided above. Assume that Alpha Surrey has 50,000 common shares outstanding and the tax rate is 25% on the tax-related items.