The following information has been obtained for the Gocker Corporation.
| 1. | Prior to 2012, taxable income and pretax financial income were identical. | |
| 2. | Pretax financial income is $1,728,300 in 2012 and $1,439,500 in 2013. | |
| 3. | On January 1, 2012, equipment costing $1,288,000 is purchased. It is to be depreciated on a straightline basis over 5 years for tax purposes and over 8 years for financial reporting purposes. (Hint: Use the half year convention for tax purposes, as discussed in Appendix 11A.) | |
| 4. | Interest of $65,700 was earned on tax exempt municipal obligations in 2013. | |
| 5. | Included in 2013 pretax financial income is an extraordinary gain of $209,100, which is fully taxable. | |
| 6. | The tax rate is 38% for all periods. | |
| 7. | Taxable income is expected in all future years. |
Part C
Prepare the bottom portion of Gocker’s 2013 income statement, beginning with “Income before income taxes and extraordinary item.”