DB 4.9 - Multiple-step income statement with several irregular items An income statement for Lemon Corporation, a retailer, is provided below: Sales Cost of Goods Sold Gross Profit Operating Expenses Income Before Taxes Income Tax Expense Net Income 2019 $ 2,300,000 1,010,000 1,290,000 500.000 790,000 237,000 $ 553,000 2018 $ 2,000,000 960.000 1,040,000 490,000 550,000 165.000 $ 385.000 2017 $ 1,800,000 860.000 940,000 450.000 490,000 147.000 $ 343.000 Additional events and transactions that were not considered in preparing the income statement above are as follows: 1. The corporation experienced an uninsured flood loss during 2019 in the amount of $100,000, 2. At the beginning of 2017, the corporation purchased office equipment for $540,000 (salvage value of $60,000) that had a useful life of 6 years. The bookkeeper used straight-line depreciation for 2017, 2018, and 2019 but failed to deduct the salvage value in computing the depreciation base for all three years. 3. Sale of securities held as part of its portfolio resulted in a loss of $57,000 (pretax) in 2019 4. When its president died in 2019, the corporation realized $150,000 in cash from an insurance policy. The cash surrender value of this policy had been carried on the books as an investment in the amount of $46,000. (The gain is nontaxable.) 5. In 2019, the corporation disposed of one of its divisions at a loss of $115,000 before taxes. Assume that this transaction meets the criteria for discontinued operations. 6. During 2019, the corporation changed its method of inventory pricing from average cost to the FIFO method. The effect of this change on prior years is to decrease 2018 pretax income by $20,000 and increase 2017 pretax income by $60,000. The FIFO method has been used for 2019. Required: Prepare a typed, corrected comparative income statement for Lemon Corporation e sure to include separate columns for each of the 3 years). Notice that based on the nature of items #1 - #6, you will need to create some additional line items and sub-totals on your income statement compared to those that are presented in the comparative income statement above. Be sure to show supporting calculations. (You can ignore earnings per share computations.) Finally, assume a tax rate of 30% on all items. DB 4.9 - Multiple-step income statement with several irregular items An income statement for Lemon Corporation, a retailer, is provided below: Sales Cost of Goods Sold Gross Profit Operating Expenses Income Before Taxes Income Tax Expense Net Income 2019 $ 2,300,000 1,010,000 1,290,000 500.000 790,000 237,000 $ 553,000 2018 $ 2,000,000 960.000 1,040,000 490,000 550,000 165.000 $ 385.000 2017 $ 1,800,000 860.000 940,000 450.000 490,000 147.000 $ 343.000 Additional events and transactions that were not considered in preparing the income statement above are as follows: 1. The corporation experienced an uninsured flood loss during 2019 in the amount of $100,000, 2. At the beginning of 2017, the corporation purchased office equipment for $540,000 (salvage value of $60,000) that had a useful life of 6 years. The bookkeeper used straight-line depreciation for 2017, 2018, and 2019 but failed to deduct the salvage value in computing the depreciation base for all three years. 3. Sale of securities held as part of its portfolio resulted in a loss of $57,000 (pretax) in 2019 4. When its president died in 2019, the corporation realized $150,000 in cash from an insurance policy. The cash surrender value of this policy had been carried on the books as an investment in the amount of $46,000. (The gain is nontaxable.) 5. In 2019, the corporation disposed of one of its divisions at a loss of $115,000 before taxes. Assume that this transaction meets the criteria for discontinued operations. 6. During 2019, the corporation changed its method of inventory pricing from average cost to the FIFO method. The effect of this change on prior years is to decrease 2018 pretax income by $20,000 and increase 2017 pretax income by $60,000. The FIFO method has been used for 2019. Required: Prepare a typed, corrected comparative income statement for Lemon Corporation e sure to include separate columns for each of the 3 years). Notice that based on the nature of items #1 - #6, you will need to create some additional line items and sub-totals on your income statement compared to those that are presented in the comparative income statement above. Be sure to show supporting calculations. (You can ignore earnings per share computations.) Finally, assume a tax rate of 30% on all items