The following information relates to Spiker Manufacturing Inc. for the fiscal year ended July 31, 2011. Assume that there are no tax rate changes, a 30% tax rate applies to all items reported in the income statement, and there are no differences between financial and taxable income.
Taxable income, year ending July 31, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,015,000
Nonoperating items included in taxable income:
Extraordinary gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121,000
Loss from disposal of a business component . . . . . . . . . . . . . . . . . . . . . . . . . . (130,000)
Prior-year error resulting in income overstatement for fiscal year 2010;
tax refund to be requested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90,000
Retained earnings, August 1, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,520,000

Instructions:
Prepare the income statement for Spiker Manufacturing Inc. beginning with Income from continuing operations before income taxes and the retained earnings statement for the fiscal year ended July 31, 2011. Apply intraperiod income tax allocation procedures to both statements.