Wade Corp. has 150,600 shares of common stock outstanding. In 2014, the company

Question

Wade Corp. has 150,600 shares of common stock outstanding. In 2014, the company reports income from continuing operations before income tax of $1,229,200. Additional transactions not considered in the $1,229,200 are as follows.

Analyze the above information and prepare an income statement for the year 2014, starting with income from continuing operations before income tax. Compute earnings per share as it should be shown on the face of the income statement. (Assume a total effective tax rate of 38% on all items, unless otherwise indicated.) (Round earnings per share to 2 decimal places, e.g. 1.48.)

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Explanation / Answer

Income statement for the year 2014:

income from continuing operations before income tax $1229200 Other loss transactions: 1 Loss on sale of fixed assets (16400) 2 loss from operations of the discontinued subsidiar (90300) the loss from disposal of the subsidiary (99700) 3 amortization of intangible assets (39700) Income from operation before tax 983100 Less Tax @ 38% (373578) Net Income from continued operation (A) 609522 4 Gain from condemnation of property 127100 Less Tax @40% (50840) Net income from condemnation of property(B) 76260 Net Income for the disposal of Shareholders (A+B) 685782 common stock outstanding 150,600 shares earnings per share $4.55 per share

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