For its fiscal year ending October 31, 2025, Haas Corporation reports the following partial data.

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.

Instructionsa. Prepare a correct partial income statement, beginning with income before income taxes.b. Explain in memo form why the original income statement data are misleading.

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Income before income taxes Income tax expense (20% × $420,000) Income from continuing operations Loss on discontinued operations Net income $540,000 84,000 456,000 120,000 $336,000