Question: selected information about income statement accounts for the reed company...
Selected information about income statement accounts for the
Reed Company is presented below (the company's fiscal year ends on
|Cost of goods sold||2,890,000||2,030,000|
|Loss on sale of assets of discontinued component||62,000||—|
On July 1, 2018, 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, 2018, for $62,000 less than their book value. Results of operations for the component (included in the above account balances) were as follows:
|Cost of goods sold||(305,000||)||(338,000||)|
|Operating income before taxes||$||49,000||$||116,000|
In addition to the account balances above, several events occurred during 2018 that have not yet been reflected in the above accounts:
- A fire caused $53,000 in uninsured damages to the main office building. The fire was considered to be an infrequent but not unusual event.
- Inventory that had cost $43,000 had become obsolete because a competitor introduced a better product. The inventory was sold as scrap for $6,000.
- Income taxes have not yet been recorded.
Prepare a multiple-step income statement for the Reed Company for 2018, showing 2017 information in comparative format, including income taxes computed at 30% and EPS disclosures assuming 400,000 shares of common stock. (Amounts to be deducted should be indicated with a minus sign. Round EPS answers to 2 decimal places.)