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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

  • college accounting -

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  • college accounting -

    Solution Close
    E15-12 (a)
    MOLINI CORPORATION
    Partial Income Statement

    For the Year Ended October 31, 2008
    Income before income taxes $540,000
    Income tax expense ($540,000 × 30%)

    162,000
    Income before extraordinary item 378,000
    Extraordinary loss from flood, net of $45,000
    tax savings ($150,000 × 30%)

    105,000
    Net income

    $273,000


    Copyright © 2000-2011 by John Wiley & Sons, Inc. or related companies. All rights reserved.

  • college accounting -

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

    MOLINI CORPORATION
    Partial Income Statement

    For the Year Ended October 31, 2008
    Income before income taxes $ 540000
    Income tax expense

    162000
    Income before extraordinary item 378000
    Extraordinary loss from flood

    105000
    Net income

    $ 273000

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