Lecondo Company is engaged in the manufacture and sale offitness apparel. Several years ago it bought a health food businessthat has incurred losses since its acquisition. In 2018, thecompany sold the health food business. The results of operationsand other activities for 2018 are summarized below.

                  Fitness Apparel       Health foods

Net sales              $17,400,000          $2,600,000

Cost of goods sold             8,100,000             1,700,000

Other operating expenses         4,700,000            1,200,000

Other:

The health food business was sold in September 2018 at adisposal loss of $500,000.

Treasury stock that had been acquired in 2017 for $130,000 wassold in 2018 for $195,000. The difference between cost and reissueprice is not taxable.

During 2018, Lecondo sold 10,000 shares of its previouslyunissued $10 par value common stock to the public at a price of $27per share.

Interest revenue of $2,000 was earned during 2018.

Cash dividends declared and paid during 2018 amounted to$700,000.

The fitness apparel division sold land at a $98,000 gain during2018.

All of the foregoing amounts are before considering the effectsof income taxes. The income tax rate is 40%.

Required: Calculate the following amounts that would appear onLecondo’s income statement. Be alert for items that should not beincluded in the computation of net income.

Gross profit

Operating income

Income from continuing operations before taxes

Income from continuing operations

Net income

Check figures:

b. Operating income, $4,600,000

c. Income from continuing operations (before taxes),$4,700,000

d. Income from continuing operations (after taxes),$2,820,000

e. Net income, $2,340,000