(Identification of Income Statement Weaknesses) The following financial statement was prepared by employees of Walters Corporation.
WALTERS CORPORATIONÂ INCOME STATEMENTÂ YEAR ENDED DECEMBER 31, 2012
Revenues
Gross  sales, including sales taxes
$1,044,300
Less: Â Returns, allowances, and cash discounts
56,200
Net  sales
988,100
Dividends, Â interest, and purchase discounts
30,250
Recoveries  of accounts written off in prior years
13,850
Total  revenues
1,032,200
Costs  and expenses
Cost of  goods sold, including sales taxes
465,900
Salaries  and related payroll expenses
60,500
Rent
19,100
Freight-in  and freight-out
3,400
Bad debt  expense
27,800
Total  costs and expenses
576,700
Income  before extraordinary items
455,500
Extraordinary  items
Loss on  discontinued styles
71,500
Loss on  sale of marketable securities
39,050
Loss on  sale of warehouse
86,350
Total  extraordinary items
196,900
Net  income
$258,600
Net  income per share of common stock
$2.30
New styles and rapidly changing consumer preferences resulted in a $71,500 loss on the disposal of discontinued styles and related accessories.
The corporation sold an investment in marketable securities at a loss of $39,050. The corporation normally sells securities of this nature.
The corporation sold one of its warehouses at an $86,350 loss.
Instructions
Identify and discuss the weaknesses in classification and disclosure in the single-step income statement above. You should explain why these treatments are weaknesses and what the proper presentation of the items would be in accordance with GAAP.