Shown below is an income statement for the 2014 year that was prepared by a poorly trained bookkeeper of Watts Updoc Corporation.
Watts Updock Corporation
INCOME STATEMENT December 31, 2014
Sales revenue $ 945,000
Deferred Revenue 35,000
Investment revenue 19,500
Cost of merchandise sold (408,500)
Selling expenses (145,000)
Administrative expense (215,000)
Interest expense (13,000)
Loss on disposal of a component of the business (30,000)
Major casualty loss (extraordinary item) (70,000)
Net Federal income tax liability (24,900)
Net income $ 93,100
Required:
Prepare a multiple-step income statement for 2014 presented in accordance with generally accepted accounting principles (including format and terminology).
Watts Updock Corporation has 50,000 shares of common stock outstanding.
It has a 30% federal income tax rate.