Selected information fromthe December 31, Year 3, trial balance of Pitt Corp.follows: Debit Credit Common stock $1,250,000 Additional paid-incapital 2,187,500 Retained earnings, January1, Year 4 1,650,000 Net sales 6,250,000 Cost of sales $3,750,000 Selling and administrativeexpenses 1,212,500 Interestexpense 122,500 Gain on extinguishment ofdebt 130,000 Loss on sale ofequipment 225,000 Loss due to earthquakedamage 700,000 Pitt uses U.S. GAAP. Other financial data for the year ended December 31, Year3: • In September, Year 3, oneof Pitt's operating plants was destroyed by an earthquake.Earthquakes are rare in the area in which the plant was located.The portion of the resultant loss not covered by insurance was$700,000. • On October 1, Year 3, PittCorp. committed itself to a formal plan to sell its Kam Division'sassets early in Year 4. On that date, Pitt estimated that the fairvalue of the component's assets was $25,000 less than the carryingvalue. Pitt also estimated that Kam would incur operating losses of$100,000 for the year-ended December 31, Year 3 and $50,000 for theperiod January 1, Year 4, through February 28, Year 4. Allestimates proved to be materially correct. • Pitt Corp. bought a truckin January of Year 1 for $180,000. The truck was expected to have aten-year useful life and no salvage value. During Year 3, PittCorp. realized that the truck would only have a total useful lifeof 5 years. The truck is being depreciated using the straight-linemethod. The depreciation expense (on the truck) to be included inselling and administrative expenses has not yet beenrecorded. • The company has an ongoingpolicy of retiring long-term debt. • Pitt Corp. had unrealizedgains of $10,000 on available-for-sale securities during thecurrent year. • Pitt Corp's pension planrecorded prior service cost of $6,000 during Year 3 due to planamendments. • Pitt's effective incometax rate is 30%. Complete the followingincome statement. Double-click on the shaded cells in Column A andselect the appropriate account from the list provided. Enter theappropriate amount in the shaded cells in Column B. Numbers to besubtracted must be entered as negative numbers. A B 1 Net sales $6,250,000 2 Cost of sales ($3,750,000) 3 4 5 Selling andadministrative expenses 6 Operatingincome $0 7 8 Other income andexpenses: 9 Interestexpense ($122,500) 10 11 Other gains andlosses: 12 Loss on sale ofequipment ($225,000) 13 14 15 16 Income before incometax 17 Income taxexpense 18 Income from continuingoperations 19 20 21 Net income $0