780000 Gross profit 520000 Operating Expenses Selling expenses 65000

780000 gross profit 520000 operating expenses selling

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    780,000                  Gross profit .......................................................      520,000 Operating Expenses Selling expenses ..................................................... $65,000 Administrative expenses ........................................    48,000          113,000 Income from operations .................................................... 407,000 Other Revenues and Gains Dividend revenue .................................................... 20,000 Interest revenue .......................................................          7,000            27,000 434,000 Other Expenses and Losses Write-off of inventory due to obsolescence .............            80,000 Income before income tax and extraordinary item ............. 354,000 Income tax ................................................................          120,360 Income before extraordinary item .................................... 233,640 Extraordinary item Casualty loss .................................................. 50,000 Less: Applicable income tax   ($50,000   .34) ............................................   17,000       (33,000 ) Net income .......................................................................... $   200,640 Per share of common stock: Income before extraordinary item  ($233,640  ÷  60,000) .............................................. $3.89* Extraordinary item, net of tax .................................    (.55 ) Net income ($200,640  ÷  60,000) .............................. $3.34 EXERCISE 4-9 (Continued)
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(b) IVAN CALDERON CORP. Retained Earnings Statement For the Year Ended December 31, 2014 Retained earnings, Jan. 1, as reported ............................................... $    980,000 Correction for overstatement of net income in prior period  (depreciation error) (net of $18,700 tax) ...................................       (36,300 ) Retained earnings, Jan. 1, as adjusted ...............................................   943,700 Add: Net income ...................................................................................           200,640   1,144,340 Less: Dividends declared ....................................................................             45,000 Retained earnings, Dec. 31 .................................................................. $1,099,340 EXERCISE 4-13 (15–20 minutes)
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Net income:       Income from continuing operations            before income tax $23,650,000       Income tax (35% X $23,650,000)         8,277,500
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