For its fiscal year ending October 31, 2017, Haas Corporation reports the following partial data shown below.

Income before income taxes .................... $540,000

Income tax expense (20% 3 $420,000) ........ 84,000

Income from continuing operations ..........456,000

Loss on discontinued operations ...............120,000

Net income ................................................. $336,000

The loss on discontinued operations was comprised of a $50,000 loss from operations and a $70,000 loss from disposal. The income tax rate is 20% on all items.

Instructions

(a) Prepare a correct statement of comprehensive income beginning with income before income taxes.

(b) Explain in memo form why the income statement data are misleading.