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May 26, 2015

Homework Help: college accounting

Posted by chris on Tuesday, October 6, 2009 at 10:55am.

For its fiscal year ending October 31, 2010, Molini Corporation reports the following partial data.

Income before income taxes $540,000
Income tax expense (30% $390,000) 117,000

Income before extraordinary items 423,000
Extraordinary loss from flood 150,000

Net income $273,000


For its fiscal year ending October 31, 2010, Molini Corporation reports the following partial data.
Income before income taxes $540,000
Income tax expense (30% $390,000) 117,000

Income before extraordinary items 423,000
Extraordinary loss from flood 150,000

Net income $273,000



The flood loss is considered an extraordinary item. The income tax rate is 30% on all items.

Instructions

Complete the correct income statement, beginning with income before income taxes.

MOLINI CORPORATION
Partial Income Statement
For the Year Ended October 31, 2010

Income before income taxes $
Income tax expenseExtraordinary loss from floodIncome before extraordinary item

Income before extraordinary itemIncome tax expenseExtraordinary loss from flood
Income before extraordinary itemIncome tax expenseExtraordinary loss from flood

Net income $

The flood loss is considered an extraordinary item. The income tax rate is 30% on all items.

Instructions

Explain in memo form why the income statement data are misleading

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