Purpose: (L.O. 6) This exercise will test your knowledge of the elements and arrangement of the major sections of the income statement.
The following list represents captions that would appear on an income statement (single-step format) for a company reporting an extraordinary gain and a loss from discontinued operations, as well as the results of continuing operations for the period. You are to “unscramble” the list and prepare a skeleton income statement using the captions given. If you do not wish to write out each caption above, you may still test your knowledge by listing the appropriate letters in the correct order.
(a) Income before extraordinary item.
(c) Income from continuing operations.
(d) Income tax expense.
(e) Discontinued operations.
(f) Extraordinary gain (net of tax).
(h) Loss from disposal of assets of discontinued segment of business (net of tax).
(i) Net income.
(j) Income before income taxes.
(k) Loss from operations of discontinued segment of business (net of tax).