Ayayai Inc. reported income from continuing operations before tax of $1,969,000 during 2023. Additional transactions occurring in 2023 but not included in the $1,969,000 were as follows:

1. The corporation experienced an insured flood loss of $88,000 during the year.

2. At the beginning of 2021, the corporation purchased a machine for $55,200 (residual value of $9,600) that has a useful life of six years. The bookkeeper used straight-line depreciation for 2021, 2022, and 2023, but failed to deduct the residual value in calculating the depreciable amount.

3. The sale of FV-NI investments resulted in a loss of $117,700.

4. When its president died, the corporation gained $110,000 from an insurance policy. The cash surrender value of this policy had been carried on the books as an investment in the amount of $50,600. (The gain is non-taxable.)

5. The corporation disposed of its recreational division at a loss of $115,000 before tax. Assume that this transaction meets the criteria for accounting treatment as discontinued operations

. 6. The corporation decided to change its method of inventory pricing from average cost to the FIFO method. The effect of this change on prior years is to decrease 2022 income by $22,000 before taxes. The FIFO method has been used for 2023.