For its fiscal year ending October 31, 2018, Henderson Corporation reports the following partial data shown below.

Income before income taxes $540,000

Income tax expense (20% $420,000) 84,000

Income from continuing operations 456,000

Loss on discontinued operations 120,000

Net income $336,000

The loss on discontinued operations was comprised of a $50,000 loss from operations and a $70,000 loss from disposal. The income tax rate is 20% on all items.

Instructions

a)Create the correct statement of comprehensive income beginning with income before income taxes.

b)Explain in memo form why the income statement data are misleading.