[FONT=Times New Roman][SIZE=3][COLOR=#000000][/COLOR][/SIZE][/FONT][FONT=Times New Roman][SIZE=3][COLOR=#000000]The following is the condensed comparative incomestatements of Jacob Corp. (including the retail business) for the years endedDecember 31, 2013 and 2012:[/COLOR][/SIZE][/FONT]
[FONT=Times New Roman][SIZE=3][COLOR=#000000][/COLOR][/SIZE][/FONT][FONT=Times New Roman][SIZE=3][COLOR=#000000] [/COLOR][/SIZE][/FONT]
[FONT=Times New Roman][SIZE=3][COLOR=#000000][/COLOR][/SIZE][/FONT][SIZE=3][COLOR=#000000][FONT=Times New Roman] 2013 2012[/FONT][/COLOR][/SIZE]
[FONT=Times New Roman][SIZE=3][COLOR=#000000][/COLOR][/SIZE][/FONT][SIZE=3][COLOR=#000000][FONT=Times New Roman] Sales $1,400,000 $900,000 [/FONT][/COLOR][/SIZE]
[FONT=Times New Roman][SIZE=3][COLOR=#000000][/COLOR][/SIZE][/FONT][SIZE=3][COLOR=#000000][FONT=Times New Roman] Costof goods sold (610,000) 400,000[/FONT][/COLOR][/SIZE]
[FONT=Times New Roman][SIZE=3][COLOR=#000000][/COLOR][/SIZE][/FONT][SIZE=3][COLOR=#000000][FONT=Times New Roman] Grossprofit 790,000 500,000[/FONT][/COLOR][/SIZE]
[FONT=Times New Roman][SIZE=3][COLOR=#000000][/COLOR][/SIZE][/FONT][SIZE=3][COLOR=#000000][FONT=Times New Roman] Operating expenses (250,000) (110,000)[/FONT][/COLOR][/SIZE]
[FONT=Times New Roman][SIZE=3][COLOR=#000000][/COLOR][/SIZE][/FONT][SIZE=3][COLOR=#000000][FONT=Times New Roman] Operating income 540,000 390,000[/FONT][/COLOR][/SIZE]
[FONT=Times New Roman][SIZE=3][COLOR=#000000][/COLOR][/SIZE][/FONT][SIZE=3][COLOR=#000000][FONT=Times New Roman] Incometax expense (216,000) (156,000)[/FONT][/COLOR][/SIZE]
[FONT=Times New Roman][SIZE=3][COLOR=#000000][/COLOR][/SIZE][/FONT][SIZE=3][COLOR=#000000][FONT=Times New Roman] Netincome $324,000 $ 234,000 [/FONT][/COLOR][/SIZE]
[FONT=Times New Roman][SIZE=3][COLOR=#000000][/COLOR][/SIZE][/FONT][FONT=Times New Roman][SIZE=3][COLOR=#000000] [/COLOR][/SIZE][/FONT]
[FONT=Times New Roman][SIZE=3][COLOR=#000000][/COLOR][/SIZE][/FONT][SIZE=3][COLOR=#000000][FONT=Times New Roman] On June 1,2013, Jacob Corp. adopted a plan to discontinue the retail side of theiroperation. [/FONT][/COLOR][/SIZE]
[FONT=Times New Roman][SIZE=3][COLOR=#000000][/COLOR][/SIZE][/FONT][FONT=Times New Roman][COLOR=#000000]The retail stores qualifies as a component of JacobCorp. as defined in SFAS No. 144. The retail stores had not yet been sold butwas considered held for sale by12/31/2013. The book value of theseretail stores was $600,000 while the net fair value of the retail stores assetswas $500,000. Before-tax data(included in the above account balances) of the discontinued operations foreach year were as follows:[/COLOR][/FONT]
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[FONT=Times New Roman][SIZE=3][COLOR=#000000][/COLOR][/SIZE][/FONT][COLOR=#000000][FONT=Times New Roman]Operating loss from operations of retailbusiness:[/FONT][/COLOR]
[FONT=Times New Roman][SIZE=3][COLOR=#000000][/COLOR][/SIZE][/FONT][FONT=Times New Roman][COLOR=#000000]2012 (1/1-12/31) $90,000[/COLOR][/FONT]
[FONT=Times New Roman][SIZE=3][COLOR=#000000][/COLOR][/SIZE][/FONT][FONT=Times New Roman][COLOR=#000000]2013 (1/1-12/31) $120,000[/COLOR][/FONT]
[FONT=Times New Roman][SIZE=3][COLOR=#000000][/COLOR][/SIZE][/FONT][FONT=Times New Roman][COLOR=#000000] [/COLOR][/FONT]
[FONT=Times New Roman][SIZE=3][COLOR=#000000][/COLOR][/SIZE][/FONT][FONT=Times New Roman][COLOR=#000000]A 40% income tax rate applies to all tax items.[/COLOR][/FONT]
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[FONT=Times New Roman][SIZE=3][COLOR=#000000][/COLOR][/SIZE][/FONT][COLOR=#000000][FONT=Times New Roman]Required: [/FONT][/COLOR]
[FONT=Times New Roman][SIZE=3][COLOR=#000000][/COLOR][/SIZE][/FONT][FONT=Times New Roman][COLOR=#000000]Revise the income statements of 2012 and 2013according to generally accepted accounting principles. Begin the statement witha recalculated income from continuing operations before income taxes. Ignore EPS disclosure. [/COLOR][/FONT]
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