Intraperiod tax allocation and the financial statements
The following information was taken from the 2012 financial records of Rothrock Consolidated. All items are pretax.
|
Debit |
Credit |
|
|
Operating revenues |
87,000 |
|
|
Operating expenses |
32,500 |
|
|
Cain on sale of short-term investments |
5,200 |
|
|
Loss on sale of business segment |
21,000 |
|
|
Income earned on disposed business segment |
3,000 |
|
|
Extraordinary loss |
5,000 |
|
|
Income due to change in accounting principle |
12,500 |
|
|
Retained earnings (beginning balance) |
72,000 |
|
|
Dividends declared |
18,000 |
The company”s income tax rate is 35 percent, and the items above are treated identically for financial reporting and tax purposes. Prepare the following:
a. An income statement.
b. A reconciliation of retained earnings.