For the year ended 12/31/07, CABOT Computer Inc. had income from continuing operations before taxes of $420,000 before considering the following transactions and events. Financial Statements have not yet been issued for the year 2007.All of the items below are before income taxes and are material.
1. During 2007 CABOT had a $4000 loss from flood; the flood was unusual and infrequent.
2. Discovered that $900 of December 2007 accrued rent revenue was omitted and not recognized when 2007 adjusting entries were being made.
3. In 2006 CABOT omitted $2200 of accrued rent expense due to an error not discovered until 2007.
4. In 2007 CABOT sold a copy machine for $1, 47,500; on the books it had a book value of $140,000.
5. The tax rate for CABOT is 40%.
Required:
Prepare the Income Statement for the year 2007.Give all relevant line items, sub-totals and totals. Begin with income from continuing operations before taxes and ignore EPS disclosures.