Before closing the books for the year ended December 31, 2007, Pitt Corp. prepared the following condensed trial balance:

Required
1. Using the multiple-step format, prepare a formal income statement for Pitt for the year ended December 31, 2007.
2. Prepare a schedule to reconcile net income to taxable income reportable on Pitt's tax return for2007.

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Debit S 7,082,500 Credit Total assets Total liabilities Common sto Additional paid-in capital Donated capital Retained earnings, 1/1/07 Net sales Cost of sales Selling and administrative expenses Interest expense Gain on sale of long-term investments Income tax expense Loss on disposition of plant assets Loss due to earthquake damage $1,700,000 1,250,000 2,097,500 90,000 1,650,000 6,250,000 3,750,000 1,212,500 122,500 130,000 300,000 225,000 475,000 513,167,500 $13,167,500 Other financial data for the year ended December 31, 2007 Federal income tax Estimated tax payments Accrued 200,000 $100,000 Total charged to income tax expense (Does not properly reflect current or deferred income tax expense or interperiod income tax allocation for income statement purposes.) $300,000 Pitt applied the provisions of FASB Statement No. 109, Accounting for Income Taxes, in its financial statements for the year ended December 31, 2007. The enacted tax rate on all types of taxable income for the current and future years is 30%. The altermative minimum tax is less than the regular income tax. Temporary difference Excess of book basis over tax basis in depreciable assets (arising from equipment donated as a capital contribution on December 31, 2007, and expected to be depreciated over five years beginning in 2008). There were no temporary differences prior to 2007 $90,000 Nondeductible expenditure Officers' life insurance expense $70,000 Earthquake damage This damage is considered unusual and infrequent. Capital structure Common stock, par value $5 per share, traded on a national exchange Number of shares: Outstanding at 1/1/07 Issued on 3/30/07 as a 10% stock dividend Sold for $25 per share on 6/30/07 Outstanding at 12/31/o7 200,000 20,000 30,000 250,000