I'm trying to prepare for an upcoming accounting test.  Below is one
of the problems I've been having difficult with:

Calculate operating income and net income.  The following information
is available from the accounting records of Spenser Co. for the year
ended December 31, 2004:
___________________________________________________________________________
  Selling, general and administrative expenses................ $ 51,000
  Accounts payable............................................   85,000
  Extraordinary gain from early retirement of bonds
    net of tax expense of $28,000.............................  104,000
  Research and development expenses...........................   37,000
  Loss from discontinued operations net of tax 
    savings of $5,000.........................................   16,000  
  Provision for income taxes..................................   74,000
  Net sales...................................................  579,000
  Interest expense............................................   64,000
  Net cash provided by operations.............................  148,000
  Cost of goods sold..........................................  272,000

____________________________________________________________________________

Questions:
  a.  Calculate the operating income for Spenser Co. for the year
ended December 31, 2004.

  b.  Calculate the company's net income for 2004.

Operating income relates to "revenues and expenses that comprise the
ongoing operating activities that the firm expects to recur." 
"...[U]nusual, nonrecurring revenues and expenses," such as, "income,
gains, and losses from discontinued operations," and, "extraordinary
gains and losses," are not considered operating income.  (Page 152)

Net sales $579,000
Less Expenses:
Cost of goods sold ($272,000)
Research and development expenses ($37,000)
Selling, general and administrative expenses ($51,000)

Operating income $219,000

Extraordinary gain from early retirement of bonds $104,000
Loss from discontinued operations ($16,000)
Provision for income taxes ($74,000)

Net income $233,000

The amount in the Accounts Payable account and the statistic regarding
net cash provided by operations are not used to calculate income.

Sincerely,

Wonko

Source: Financial Accounting, sixth edition, by Stickney, Weil, and
Davidson, Harcourt Brace Jovanovich, Inc. (1991)

Very detailed answer.  Thank you

Dont want to burst your bubble but your answer is incorrect - you left
out the interest expense of $64,000 which overstated your net income.

P9.18. a.  
Net sales	                                     $579,000
Cost of goods sold                                  (272,000)
Gross profit	                                     $307,000
Selling, general and administrative expenses	     (51,000)
Research and development expenses	             (37,000)
Operating income (or Income from operations)	     $219,000

b.  Operating income (or Income from operations)     $219,000
    Interest expense	                             (64,000)
    Income from continuing operations before taxes   $155,000
    Provision for income taxes	                     (74,000) 
   Income from continuing operations		     $ 81,000
    Loss from discontinued operations, net of tax savings of $5,000(16,000)
    Earnings before extraordinary item		      $ 65,000
    Extraordinary gain from early retirement of 
    bonds,net of tax expense of $28,000		   $104,000 
    Net income					    $169,000

How would you prepare a good form income statement based on this information?