Income statement information for Linz Corporation in 2014 follows.
a. Administrative expenses, $220,000
b. Cost of goods sold, $880,000
c. Extraordinary loss from a storm (net of taxes, $20,000), $40,000
d. Income taxes expense, continuing operations, $84,000
e. Net sales, $1,780,000
f. Selling expenses, $380,000

Required
1. Prepare Linz’s income statement for 2014 (ignore earnings per share data).
2. Which item in Linz’s income statement affects the company’s quality of earnings? Why does it have this effect?