Income Statement Preparation

Watson Corporation has several subsidiaries and the accounts below reflect their combined amounts before income taxes and excluding the amounts noted. Watson Corporation's capital structure consists of 20,000 shares of common stock. At December 31, 2018, an analysis of the accounts and discussions with company officials revealed the following information:

Sales	1,375,000
Purchases	820,000
Purchase Discounts	5,000
Purchase Returns	15,000
Freight in	11,000
Freight Out	8,000
Hurricane Loss	22,000
Selling Expenses	110,000
Bad Debt Expense	12,000
Cash	60,000
Accounts Receivable	90,000
Common Stock	200,000
Preferred Stock	100,000
Accumulated Depreciation	180,000
Dividend Revenue	8,000
Inventory, January 1, 2018	170,000
Inventory, December 31, 2018	182,000
Unearned Service Fees	4,400
Loss on restructuring of finance division	50,000
Gain on sale of equipment	19,000
Accrued Interest Payable	1,000
Land	370,000
Patents	100,000
Gain on Sale of Investments	23,000
General and Administrative expenses	150,000
Depreciation Expense	50,000
Retained Earnings, January 2018	270,000
Interest Expense	7,000
Allowance for doubtful accounts	5,000
Dividends Declared	51,000
Allowance for doubtful accounts	5,000
Notes Payable	200,000
Machinery and Equipment	450,000
Materials and supplies Inventory	40,000
Accounts Payable	60,000

Excluded from the above numbers are the operations of the Art Department which the company decided to discontinue on November 1st. The information on the 2018 operations of the Art Department are presented below:

	2018 Operations
Sales	170,000
Cost of Goods Sold	79,000
Selling Expenses	34,000
General and Administrative Expenses	20,000
Loss on asset Sales after measurement date	10,000

The net realizable value of the remaining Art Department assets is $15,000 less than their net book value.

A 30% tax rate applies to all items.

Prepare a multiple step income statement