The income statement of Heifer Technology Inc. for the year ended December 31, 2013, is given below. Using the yearly income statement and the supplemental information, reconstruct the third-quarter interim statement for Heifer.

Supplemental information:

(a) Assume a 35% tax rate.

(b) Third-quarter sales were 30% of total sales.

(c) For interim reporting purposes, a gross profit rate of 41% can be justified.

(d) Variable operating expenses are allocated in the same proportion as sales. Fixed operating expenses are allocated based on the expiration of time. Of the total operating expenses, $70,000 relate to variable expenses.

(e) The equipment was sold June 1, 2013.

(f) The extraordinary loss occurred September 1, 2013.

Heifer Technology Inc.

Income Statement

For the Year Ended December 31, 2013

Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,200,000

Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 710,000

Gross profit on sales. . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . $ 490,000

Operating expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104,000

Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 386,000

Gain on sale of equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,000

Income from continuing operations before income taxes . . . . . . . . . . . . . . . . . . $ 408,000

Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142,800

Income from continuing operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 265,200

Extraordinary loss (net of income tax savings of $45,000) . . . . . . . . . . . . . . . . . . (80,000)

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 185,200