Rembrandt Paint Company had the following income statement items for the year en

Question

Rembrandt Paint Company had the following income statement items for the year ended December 31, 2018($ in 000s): 30,000 Cost of goods sold Net sales Interest income Interest expense 320 Selling and administrative expenses 590 Restructuring costs $16,500 3,700 2,000 In addition, during the year the company completed the disposal of its plastics business and incurred a loss from operations of $2.8 million and a gain on disposal of the component's assets of $4.4 million. 600,000 shares of common stock were outstanding throughout 2018. Income tax expense has not yet been recorded. The income tax rate is 40% on all items of income (oss). Required: Prepare a multiple-step income statement for 2018, including EPS disclosures. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in thousands except earnings per share. Round EPS answers to 2 decimal places.)

Explanation / Answer

Solution: REMBRANDT PAINT COMPANY Income Statement For the Year Ended December 31, 2018 ($ in thousands, except per share amounts) Sales revenue 30,000 Cost of goods sold -16,500 Gross profit 13,500 Operating expenses Selling and administrative -3,700 Restructuring costs -2000 -5,700 Operating income 7,800 Interest income (expense), net -270 Income from continuing operations before income taxes 7,530 Income tax expense -3012 Income from continuing operations 4,518 Discontinued operations Income from operations of discontinued component 1600 Income tax expense -640 Income on discontinued operations 960 Net income 5,478 Earnings per share: Income from continuing operations 7.53 Income on discontinued operations 1.60 Net income 9.13 Working Notes: REMBRANDT PAINT COMPANY Income Statement For the Year Ended December 31, 2018 ($ in thousands, except per share amounts) Sales revenue 30,000 a Cost of goods sold -16,500 b Gross profit 13,500 c=a-b Operating expenses Selling and administrative -3,700 c Restructuring costs -2000 d -5,700 e=c+d Operating income 7,800 f=c-e Interest income (expense), net -270 g =590-320 Income from continuing operations before income taxes 7,530 h=f-g Income tax expense -3012 I = h x 40% Income from continuing operations 4,518 j=h-i Discontinued operations Income from operations of discontinued component 1600 k = 4400-2800 Income tax expense -640 L=k x 40% Income on discontinued operations 960 M= K-L Net income 5,478 N=J+M Earnings per share: Income from continuing operations 7.53 O = j/600 Income on discontinued operations 1.60 P= M/600 Net income 9.13 Q= N/600 or O +P Notes: Income from operations of discontinued component 1600 [ gain on disposal 4,400 - loss from operation 2,800] EPS calculation are done by dividing income by 600 , since, outstanding shares 600,000 shares Notes: Alphabetical explanation is given just for understanding, Please feel free to ask if anything about above solution in comment section of the question.

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