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Presented below is information which relates to Labrador Limited for 2017:

Collections of credit sales.................................................................................... $1,100,000

Retained earnings, January 1, 2017......................................................................... 800,000

Sales...................................................................................................................... 1,900,000

Selling and administrative expenses........................................................................ 290,000

Casualty loss (pre-tax).............................................................................................. 350,000

Cash dividends declared on common stock.............................................................. 34,000

Cost of goods sold................................................................................................. 1,100,000

Loss resulting from calculation error on depreciation charge in 2015 (pre-tax)...... 460,000

Other revenues......................................................................................................... 180,000

Other expenses......................................................................................................... 120,000

Loss from early extinguishment of debt (pre-tax)..................................................... 340,000

Gain from transactions in foreign currencies (pre-tax)............................................. 220,000

Proceeds from sale of Strathroy common shares...................................................... 60,000

Additional information:

1.Early in 2017, Labrador changed depreciation methods for its plant assets from the double declining-balance to the straight-line method. The affected assets were purchased at the beginning of 2015 for $200,000, had no residual value, and had useful lives of 10 years. Depreciation expense of $20,000 is included in the "Selling and Administrative Expenses" of $290,000.

2.On September 1, 2017, Labrador sold one of its segments (product line) to Best Industries for a gain (pre-tax) of $550,000. During the period January 1 to August 31, the discontinued segment incurred an operating loss (pre-tax) of $480,000. This loss is not included in any of the numbers shown above.

3.Included in "Selling and Administrative Expenses" is "Bad Debts Expense" of $19,000. Labrador bases its bad debts expense upon a percentage of sales. In 2015 and 2016, the percentage was 0.5 %. In 2017, the percentage was changed to 1%.

Instructions

In good form, prepare a multiple-step income statement for 2017. Assume a 20% income tax rate and that 20,000 common shares were outstanding during the year.

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