Question 4 - (12 Marks) Presented below is information which relates to Labrador Limited for 2017 Collections of credit sales. Retained earnings, January 1, 2017 Sales Selling and administrative expenses. Casualty loss (pre-tax). Cash dividends declared on common stock Cost of goods sold Loss resulting from calculation error on depreciation charge in 2015 (pre-tax) Other revenues Other expenses Loss from early extinguishment of debt (pre-tax) Gain from transactions in foreign currencies (pre-tax) Proceeds from sale of Strathroy common shares... $1,100,000 800,000 1,900,000 290,000 350,000 34,000 1,100,000 460,000 180,000 120,000 340,000 220,000 60,000 Additional information: 1. Early in 2017, Labrador changed depreciation methods for its plant assets from the double declining balance to the straight-line method. The affected assets were purchased at the beginning of 2015 for $200,000, had no residual value, and had useful lives of 10 years Depreciation expense of $20,000 is included in the "Selling and Administrative Expenses" of $290,000 2 On September 1, 2017 Labrador sold one of its segments (product line) to Best Industries for a gain (pre-tax) of $550,000. During the period January 1 to August 31, the discontinued segment incurred an operating loss (pre-tax) of $480,000. This loss is not included in any of the numbers shown above. 3. Included in "Selling and Administrative Expenses" is "Bad Debts Expense" of $19.000. Labrador bases its bad debts expense upon a percentage of sales. In 2015 and 2016, the percentage was 0.5 %. In 2017, the percentage was changed to 1%. Instructions In good form, prepare a multiple-step income statement for 2017 Assume a 20% income tax rate and that 20,000 common shares were outstanding during the year. 15. Protected View stion 4 - (12 Marks) unted below is information which relates to Labrador Limited for 2017: Collections of credit sales $1,100,000 Retained earnings, January 1, 2017 800,000 Sales ...... 1,900,000 Selling and administrative expenses. 290,000 Casualty loss (pre-tax)... 350,000 Cash dividends declared on common stock 34,000 Cost of goods sold 1,100,000 Loss resulting from calculation error on depreciation charge in 2015 (pre-tax) 460,000 Other revenues 180,000 Other expenses 120,000 Loss from early extinguishment of debt (pre-tax). 340,000 Gain from transactions in foreign currencies (pre-tax). 220,000 Proceeds from sale of Strathroy common shares 60,000 dditional information: Early in 2017, Labrador changed depreciation methods for its plant assets from the double declining-balance to the straight-line method. The affected assets were purchased at the beginning of 2015 for $200,000, had no residual value, and had useful lives of 10 years! Depreciation expense of $20,000 is included in the "Selling and Administrative Expenses" of $290,000 On September 1, 2017, Labrador sold one of its segments (product line) to Best Industries for a gain (pre-tax) of $550,000. During the period January 1 to August 31. the discontinued segment incurred an operating loss (pre-tax) of $480,000. This loss is not included in any of the numbers shown above. 3 Included in "Selling and Administrative Expenses" is "Bad Debts Expense" of $19.000 Labrador bases its bad debts expense upon a percentage of sales. In 2015 and 2016, the percentage was 0.5 %. In 2017, the percentage was changed to 1% Instructions In good form, prepare a multiple-step income statement for 2017. Assume a 20% income tax rate and that 20.000 common shares were outstanding during the year