Question 11 (15 marks) The following are the actual transactions for Incognito Corporation in 2017. The fiscal year-end for Incognito is December. Cash Sales $ 1,300,000 Sales on account $ 12,000,000 Inventory purchases (paid immediately) $ 5,000,000 Beginning inventory value (FIFO) 1,500,000 Ending inventory value (FIFO) 2,000,000 Employee wages and benefits 957,000 Marketing and advertising expenses 640,000 Utilities expense 310,000 Interest expense 30,000 Depreciation expense - computer 100,000 Depreciation expense - machinery 110,000 Loss on discontinued operations before tax 120,000 Gain on disposal on machinery 50,000 Additional information: a) On Mar 1, 2017, the company purchased four new trucks for $700,000. After the truck was delivery to the company, one of the drivers accidentally injured himself while test driving the truck. The company was partly held liable for the employee's injury and had to pay $100,000, as this was not covered by the company's insurance. Depreciation rate is 20%. Estimated residual value is $90,000. The company uses declining balance method, and does not record for partial year depreciation. b) On Dec 31, 2016, the account receivable and allowance for doubtful accounts have balances showing $2,000,000 and $400,000 respectively. In 2017, the company collected $11,000,000, wrote off $200,000, and also recovered $150,000 which was written off in the previous year. The company has an allowance policy based on 20% of closing gross accounts receivable. c) The company has a provision for warranties based on an allowance method. In 2017, the company paid $200,000 warranties. The estimated warranty payables are as follow: $300,000 (Dec 2016) and $400,000 (Dec 2017). d) The company holds 10,000 shares of Telly Corporation. When the shares were first acquired, the company opted for OCI election. On Dec 31, 2016, the share price did not change and was $100 per share. On Dec 31, 2017, the share price has declined to $90 per share. e) On February 18, 2018, one of the newly purchased trucks had a major accident on the highway. ICBC is still currently investigating the incident. Thankfully no one was seriously hurt in the accident. f) Income tax rate is 30%. Required: Prepare a multi-step income statement that includes relevant subtotals for the fiscal year end Dec 31, 2017. (15 marks)