The ledger of Port Hope Corporation at November 30, 2021, contains the following summary data:

Your analysis reveals the following additional information:

1. The company has a 25% income tax rate.

2. The communications devices division was discontinued on August 31. The profit from operations for the division up to that day was $20,000 before income tax. The division was sold at a loss of $75,000 before income tax.

3. There were 200,000 common and 5,000 preferred shares issued on December 1, 2020, with no changes during the year.

Instructions

a. Prepare a multiple-step income statement for the year.

b. Prepare a statement of comprehensive income as a separate statement.

Taking It Further

Why are gains and losses from discontinued operations reported separately from continuing operations?

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Cash dividends-common Cash dividends-preferred Common shares Cost of goods sold Depreciation expense 65,000 25,000 325,000 7,280,000 355,000 9,124,000 Operating expenses Other comprehensive income-loss on equity investments (before income tax) Rent revenue Preferred shares ($5 noncumulative) Retained earnings, December 1, 2020 $1,120,000 83,000 48,000 400,000 Sales 755,000