Information concerning operations of Camping Gear Corporation during 2011 is as follows:
a. Administrative expenses, $90,000 b. Cost of goods sold, $420,000
c. Extraordinary loss from an earthquake (net of taxes, $36,000), $60,000 d. Sales (net), $900,000
e. Selling expenses, $80,000 f. Income taxes expense applicable to continuing operations, $105,000
Required
1. Prepare the corporation’s income statement for the year ended December 31, 2011, including earnings per share information. Assume a weighted average of 50,000 common shares outstanding during the year.
2. Which item in Camping Gear Corporation’s income statement affects the company’s quality of earnings? Why does it have an effect on quality of earnings?