Exercise 1: Income Statement: Presented below is information related to Farr Company. Retained earnings, December 31, 2010 Sales Selling and administrative expenses Hurricane loss (pre-tax) on plant (extraordinary item) Cash dividends declared on common stock Cost of goods sold Gain resulting from computation error on depreciation charge in 2009 (pre-tax) Other revenue Other expenses S 650,000 1,500,000 240,000 290,000 33,600 780,000 520,000 120,000 100,000 Prepare in good form a multiple-step income statement for the year 2011 . Assume a 30% tax rate and that 80,000 shares of common stock were outstanding during the year Solution