In Quarter 2, MNO Corp had sales of $800,000 (4,000 items sold at $200 each).

In preparation of the Quarter 2 interim report, they had the following items to consider:

 MNO uses LIFO inventory – the 4,000 items sold had a cost of $100 each. The expected replacement cost per item is estimated to be $130 each.  MNO believes they will replace all 4,000 of the items before the end of the year and elect to apply NIFO to value COGS.

1. On the first day of quarter 2, they paid for 3 month’s insurance, paying $16,000.
2. Annual property taxes paid on the last day of the quarter totaled $36,000.
3. Quarterly depreciation was $40,000.
4. Advertising costs of $30,000 were incurred in the last week of the quarter; $20,000 was considered toward Quarter 3.
5. Salaries for the quarter are $50,000
6. Annual bonus is expected to be $60,000.
7. A gain was realized this quarter, totaling $120,000.
8. A lawsuit against MNO, deemed probable and estimated at $100,000 was filed this quarter.
9. MNO incurred a major repair this quarter of $150,000.
10. MNO had pre-tax income from Quarter 1 totaling $400,000 at an average tax rate of 20%.  MNO estimates the revised annual tax rate to be 30%.

 REQUIRED: Prepare, in decent order, the income statement for MNO, showing net income after tax.   Be certain to label each line item.

Answer rating: 100% (QA)

Income statement of MNO for the quarter ended Particula... View the full answer