Selected information for Muffin’s Muffins Inc. for 2018 ispresented below. All amounts are pretax. The effective tax rate is30%.
Loss from operations of discontinued line ofbusiness $ 420,000
Inventory 3,185,000
Administrativeexpenses 479,000
Retained earnings, begbalance 2,749,600
Interestexpense 101,600
Accounts receivable,net 573,200
Unrealized holding loss on available-for-salessecurities 118,800
Dividends declared andpaid 241,750
Cumulative decrease in income for change in depreciation method 197,000
BondsPayable 1,380,000
Gain on disposal of discontinued line ofbusiness 174,000
Sales 4,700,000
Loss due toflooding 319,200
Accumulateddepreciation 2,943,700
Cumulative decrease in income of change from FIFO to weightedaverage 87,900
Gain on sale ofland 267,000
Cumulative increase in income for reduced estimate for baddebts
from 4% to 2.5% 81,000
Sellingexpenses 326,700
Foreign currency translationgain 103,900
Common stock, 240,000shares 8,641,000
Accumulated other comprehensive income, beg balance(CR) 693,470
Failed to recognize interest on investment in2017 136,000
Dividend Income 91,000
Cost of goods sold 2,745,000
Based on the above information, answer the followingquestions.
(HINT: Prepare a multi-step income statement and retainedearnings statement
- What amount would be reported for operating income?
- What amount would be reported in a 2018 income statement forincome tax?
