Ralston Company Has Two Divisions, X and Y During the Latter Part of 2014, Ralston Disposed of a Cash

question 85

Essay

Ralston Company has two divisions, X and Y.The operations and cash flows of these two divisions are clearly distinguishable.On July 1, 2014, the company decided to dispose of the assets and liabilities of Division Y.It is probable that the disposal will be completed early next year.The revenues and expenses of Ralston Company for 2014 and for the preceding two years are as follows:
$\begin{array}{lllr}&2014&2013&2012\\\text { Sales-Division X } & 20,000 & 18,400 & 17,000 \\\text { Sales-Division Y } & 15,000 & 16,200 & 18,000 \\\text { Total non tax expenses-X } & 14,000 & 16,200 & 15,000 \\\text { Total non tax expenses-Y } & 15,900 & 15,000 & 15,400\end{array}$ During the latter part of 2014, Ralston disposed of a portion of Division Y and recognized a pretax loss of $8,000 on the disposal.The income tax rate for Ralston Company is 40%.

Prepare the comparative income statements for Ralston Company for the years 2012, 2013, and 2014.

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