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    Smith Co Multi-Step Income Statement

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    Smith Company

    Retained earnings, 12/31/05 750,000
    Sales 2,000,000
    Selling & administration 240,000
    Hurricane loss (pre tax) on plant (extraordinary item) 250,000
    Cash dividends declared on common stock 33,600
    Cost of goods sold 960,000

    Gain resulting from computation error
    on depreciation charge in 2004 (pre tax) 420,000

    Other revenue 80,000
    Other expenses 50,000

    Prepare in good form a multi-step income statement for the year 2006. Assume a 30% tax rate and that 50,000 shares of common stock were outstanding during the year.

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    Solution Summary

    The solution creates a multi-step income statement for smith co.