Selected information about income statement accounts for the Reed Company is pre

Question

Selected information about income statement accounts for the Reed Company is presented below (the company's fiscal year ends on December 31):

On July 1, 2013, the company adopted a plan to discontinue a division that qualifies as a component of an entity as defined by GAAP. The assets of the component were sold on September 30, 2013, for $66,000 less than their book value. Results of operations for the component (included in the above account balances) were as follows:

In addition to the account balances above, several events occurred during 2013 that have not yet been reflected in the above accounts:

Prepare a multiple-step income statement for the Reed Company for 2013, showing 2012 information in comparative format, including income taxes computed at 40% and EPS disclosures assuming 500,000 shares of common stock. (Amounts to be deducted should be indicated with a minus sign.Round EPS answers to 2 decimal places.)

2013 2012   Sales $ 4,600,000 $ 3,700,000   Cost of goods sold 2,900,000 2,040,000   Administrative expenses 840,000 715,000   Selling expenses 400,000 352,000   Interest revenue 154,000 144,000   Interest expense 208,000 208,000   Loss on sale of assets of discontinued component 66,000 —

Explanation / Answer

Income statement accounts for the Reed Company the company's fiscal year ends on December 31.

E.P.S 2016 = 165,000 / 500,000 = .33

E.P.S 2016 = 317,400 / 500,000 = .634

Condition ii.

Income statement accounts for the Reed Company the company's 1/1/16 - 9/30/16.

Particular's Amount ($) 2016 Amount ($) 2015 Revenues from primary activities $46,00,000 $37,00,000 Interest revenue $154,000 $144,000 Total income 47,54,000 38,44,000 Expenses Cost of goods sold 29,00,000 20,40,000 Administrative expenses 840000 715000 Selling expenses 400000 352000 Interest expense 208000 208000 Loss on sale of assets of discontinued component 66,000 Loss in the period of 1/1/16-9/30/16 39,000 Total Expenses 44,53,000 33,15,000 Net Income 301,000 529,000 Income Tax@40% 120,400 211,600 Income After Tax 165,000 317,400 Income Avilable for Share Holder

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