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In Quarter 2, E Corp had sales of $600,000 (6,000 items sold at $100 each). In preparation of the Quarter 2 interim report, they had

In Quarter 2, E Corp had sales of $600,000 (6,000 items sold at $100 each).

In preparation of the Quarter 2 interim report, they had the following items to consider:

  1. E Corp uses LIFO inventory the 6,000 items sold had a cost of $45 each. The expected replacement cost per item is estimated to be $60 each. E Corp believes they will replace 4,000 of the items before the end of the year and are hopeful to apply NIFO to value COGS.
  2. On the first day of quarter 2, they paid for 3 months insurance, paying $12,000.
  3. Annual property taxes paid on the last day of the quarter totaled $24,000.
  4. Annual depreciation was $68,000.
  5. Advertising costs of $40,000 were incurred in the last week of the quarter; $10,000 was considered toward Quarter 3.
  6. Salaries for the quarter are $70,000
  7. Annual bonus is expected to be $80,000.
  8. A gain was realized this quarter, totaling $140,000.
  9. A lawsuit against E, deemed probable and estimated at $100,000 was filed this quarter.
  10. E Corp incurred a major repair this quarter of $150,000.
  11. E Corp had pre-tax income from Quarter 1 totaling $400,000 at an average tax rate of 20%.
  12. E Corp estimates the revised annual tax rate to be 30%.

REQUIRED: Prepare, in decent order, the Quarter 2 income statement for E Corp, showing net income after tax. Be certain to label each line item.

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