The companys product liability insurance coverage with respe

The company\'s product liability insurance coverage with respect to insured events occurring af. ter January 1 of the current year is substantially less than the amount of that insurance available in the recent past. The company is now predominantly self-insured in this area. The reduction in insurance coverage reflects trends in the liability insurance field generally and is not unique to the company. BLEMS-SET A Income Statement Format The following information from Belvidere Company\'s current opera- tions is available: . $73,000 772,000 Loss from operations of discontinued segment. . . . . . . . . . Gain on disposal of discontinued segment . . . . . . . .. . . . . . . 10,000 60,000 40,000 . Income taxes: Amount applicable to ordinary operations . Reduction applicable to loss from operations of discontinued segment Amount applicable to gain on disposal of discontinued segment 60,000 24,000 16,000 .. Requiread a. Prepare a multiple-step income statement. (Disregard earnings per share.)

Solution

a) The multiple income statement is shown as follows:-

Belvidere Company

Income Statement (Amounts in $)

Sales Revenue	772,000
Less: Cost of Goods Sold	(464,000)
Gross Profit on Sales	308,000
Less: Selling Expenses	(87,000)
Less: Administrative Expenses	(73,000)
Operating Income	148,000
Less: Interest Expense	(10,000)
Income from Continuing Operations before taxes	138,000
Less: Income Tax Expense	(60,000)
Income from Continuing Operations	78,000
Discontinued Operations
Less: Loss from operations of discontinued segment (after tax) ($60,000-$24,000)	(36,000)
Add: Gain on disposal of discontinued segment (after tax) ($40,000-$16,000)	24,000
Net Income	66,000