Class, before attempting this exercise, please ensure you understand the proper accounting for corrections of prior period errors, changes in estimate and changes in accounting estimates Criteria Type of Situation Changes in Examples Change in the basis of inventory pricing from FIFO to average- Placement on Income Statement Change from one generally Recast prior years' income accepted accounting principle to another statement on the same basis as the newly adopted principle (Shown net of tax.) principle cost. Normal, recurring corrections and Changes in the realizability of Show change only in the affected es in estimates receivables and inventories changes in estimated lives of equipment, intangible assets; changes in estimated liability for warranty costs, income taxes, and salary payments. accounts in current and future adjustments. periods. (Not shown net of tax.) Mistake, misuse of facts. Error in reporting income and Treat as prior period adjustment restate prior years' income statements to correct for error errors expenses. (Shown net of tax.) Presented below is information related to Tidal Wave Company $2,350,0 Retained earnings, December 31, 20X:2 2,600,00 Sales 240,000 250,000 53,600 1,000,00 Selling and administrative expenses Earthquake loss (pre-tax) on plant Cash dividends declared on common stock Cost of goods sold Gain resulting from computation error on depreciation charge in 2009 (pre- 520000 tax) Other revenue Other expenses 80,000 50,000 Instructions: Prepare in good form a multiple-step income statement for the year 20X2. Assume a 30% tax rate and that 100,000 shares of common stock were outstanding during the year