Thorpe Co.’s income statement for the year ended December 31, 2007, reported net income of $74,100. The auditor raised questions about the following amounts that had been included in net income:
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Unrealized loss on decline in market value of noncurrent in vestments in stock classified as available-for-sale (net of tax) |
$(5,400) |
|
Gain on early retirement of bonds payable (net of $11,000 tax effect) |
22,000 |
|
Adjustment to profits of prior years for errors in depreciation (net of $3,750 tax effect) |
(7,500) |
|
Loss from fire (net of $7,000 tax effect) |
(14,000) |
The loss from the fire was an infrequent but not unusual occurrence in Thorpe’s line of business. Thorpe’s December 31, 2007 income statement should report net income of
- $65,000
- $66,100
- $81,600
- $87,000