Excerpts from Crozier Industries€™ financial records as of December 31, 2018, follow:

The amounts shown do not include any tax effects. Crozier€™s tax rate is 35 percent. Assume that all items are treated the same for accounting and income tax purposes.

REQUIRED:
a. Indicate which items should be included on the company€™s income statement. Classify each item to be included on the income statement as one of the following:
(1) Usual and frequent
(2) Unusual or infrequent
(3) Disposal of business segment
(4) Mandated change in accounting method
b. Prepare an income statement using the single-step format, and assess the persistence of each item on the income statement.

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Debit Credit Sales 977,000 Sales return and allowances 9,000 Costs of goods sold 496,000 Dividends 50,000 Rent expense 90,000 Salaries and wages payable 175,000 Loss on disposal of segment 2,000 Loss from operations of segment 10,000 Depreciation expense 100,000 Loss on accounting change 38,000 Insurance expense 12,000 Inventory 576,000 Selling and administrative expenses 109,000 Prepaid insurance 48,000 Gain on sale of investments 142,000