E4-10 (Condensed Income Statement—Periodic Inventory Method) Presented below are selected ledger

accounts of Spock Corporation at December 31, 2004

Spock’s effective tax rate on all items is 34%. A physical inventory indicates that the ending inventory is
$686,000. Instructions prepare a condensed 2004 income statement for Spock Corporation.

Spock Corporation
Income Statement

For Year Ended Dec 31, 2004

Net Sales......................................................................... $4,162,000

Cost of goods sold.......................................................... (2,665,000)

Gross profit on sales .................................................... 1,497,000

Operating Expenses

Selling Expenses …....................... $ 636,000

Admin and general Expense........ 491,000 (1,127,000)

Income from operations................................................... 370,000

Other Revenues and Expenses

Interest revenue......................... 240,000

Dividend revenue...................... (176,000) 64,000

Income before Income tax ……………………………………………. 434,000

Income Tax …………. …………………………….. 147,560)

Income before extra-ordinary item ………………………. 286,440

Extra ordinary loss ….………………………….. 70,000

Less: Applicable tax reduction ……………… (23,800) (46,200)

Net Income ……………………………………………………………… $ 240,240

Earnings Per share (900,000 ÷ $ 10 par value = 90,000 share)

Income before extraordinary item (286,440 ÷ 90,000)… $ 3.18

Extraordinary Item, net of tax …………………………………….. $ .51

Net Income …………………………………………………………………. $ 2.67