Income Statement, Including Corrections

Essay

Income statement, including corrections
During calendar 2020, Scone Corporation reported income from continuing operations of $800,000 (after taxes). In addition, the following information, which has not yet been considered or included in the above figure, has been revealed:
1. On December31, 2020, Scone adopted the average cost method of inventory valuation. The company had previously used the FIFO method. The change decreases income for 2020 by $50,000 (pre-tax) and the cumulative effect of the change on prior years' income was a $60,000 (pre-tax) decrease.
2. A machine was sold for $140,000 cash during the year at a time when its book value was $100,000. (Depreciation has been correctly recorded.)
3. Scone decided to discontinue its stereo division in 2020. During the current year, the loss on the disposal of this segment was $150,000 (before applicable taxes).
Instructions
Present in good form the income statement of Scone Corporation for 2020 starting with "income from continuing operations." Assume that Scone's tax rate is 20% and that 100,000 common shares were outstanding during the year.