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Selected information for Muffin’s Muffins Inc. for 2018 ispresented below. All amounts are pretax. The effective tax rate is30%.

Loss from operations of discontinued line ofbusiness                                $   420,000

Inventory                                                                                                        3,185,000

Administrativeexpenses                                                                                    479,000

Retained earnings, begbalance                                                                    2,749,600

Interestexpense                                                                                                101,600     

Accounts receivable,net                                                                                    573,200

Unrealized holding loss on available-for-salessecurities                                118,800     

Dividends declared andpaid                                                                              241,750

Cumulative decrease in income for change in depreciation method                197,000

BondsPayable                                                                                              1,380,000

Gain on disposal of discontinued line ofbusiness                                           174,000

Sales                                                                                                              4,700,000

Loss due toflooding                                                                                         319,200

Accumulateddepreciation                                                                             2,943,700

Cumulative decrease in income of change from FIFO to weightedaverage       87,900

Gain on sale ofland                                                                                            267,000

Cumulative increase in income for reduced estimate for baddebts

     from 4% to 2.5%                                                                                            81,000

Sellingexpenses                                                                                                326,700

Foreign currency translationgain                                                                       103,900

Common stock, 240,000shares                                                                    8,641,000     

Accumulated other comprehensive income, beg balance(CR)                      693,470

Failed to recognize interest on investment in2017                                            136,000

Dividend Income                                                                                                 91,000

Cost of goods sold                                                                                       2,745,000

Based on the above information, answer the followingquestions.

(HINT: Prepare a multi-step income statement and retainedearnings statement

1. What amount would be reported for operating income?
2. What amount would be reported in a 2018 income statement forincome tax?