Reference no: EM132657343

The Rayburn Company had income from continuing operations before tax of $1,575,000 in 2014. Additional pre-tax transactions not included in the computation of the $1,575,000 are as follows:

1. In 2014, Rayburn decided to sell one of its manufacturing divisions, which qualifies as a discontinued operation for financial reporting purposes. On Nov. 1, 2014, the division assets were sold for $3,250,000. On the date of the sale, the division assets had a book value of $3,750,000. The discontinued division had a loss from operations from Jan. 1, 2014 through Nov. 1, 2014 of $200,000.

2. The sale of operational equipment resulted in a loss of $57,000.

3. Rayburn acquired 70% of the outstanding stock of Koch Co. and as such, consolidates Koch Co.'s financial results with its own. Koch Co. had net income of $300,000 in 2014

REQUIRED:

Problem 1: Use all of the information above to prepare a 2014 income statement for the Rayburn Company beginning with income from continuing operations before tax. Assume an income tax rate of 40%. Provide full disclosure on the Income Statement, but ignore EPS disclosures.