Question

Skysong Inc. reported income from continuing operations before taxes during 2017 of $2,200,000. Additional transactions occurring in 2017 but not considered in the $2,200,000 are as follows. 1. Again of $126,000 (pretax) asaresult of selling securities from its investment portfolio 2. A $15.000 lass before taxes asaresult of operating the discontinued dothing division during 2017. 3. A loss of $74,000 before taxes as a result of disposing of its clothing division. Assume that this transaction meets the criteria for discontinued operations. 4. An uninsured $134,000 loss due to a fire. 5. At the beginning of 2015, the corporation purchased a machine for $280.000 (salvage value of $35,000) that had a useful life of 10 years. The bookkeeper used straight-line depreciation for 2015, 2016, and 2017, but failed to deduct the salvage value in computing the depreciation base. 6. The corporation decided to change its method of inventory pricing from average cost to the FIFO method. The effect of this change on prior years is to increase 2015 income by $61,000 and decrease 2016 income by $28.000 before taxes. The FIFO method has been used for 2017. Prepare an income statement for the year 2017 starting with income from continuing operations before taxes. Compute carnings per share as it should be shown on the face of the income statement. Common shares outstanding for the year arc 400,000 shares. {Assumne a lax rate of 30% on all items.) (Round earnings per share to 2 decimal places, eg. 1.48 and all other answers to 0 decimal places, eg. 5,275.) SKYSONG INC. Income Statement (Partial) For the Year Ended December 31, 2017 Income From Contingerations Retare income Tax Income Tax Income From Continuing Operations Discontinued Operations Loss on Disposal of Clothing Division. Net of Tom $ Per share of common stock: Net Income (Loss)

Answer 1

Solution mun working Note: I MN from continuing operations computation of income before tanes mm mw mm un Amount) As Previously stated 92.00.000 Gain on sale of securities 1,26,000 Loss from fire (1,34,000) error in computation of depreciation As compared (280.000) 98.000 Toyy corrected (2,80.000 - 35.000) (24.500) 3500 loyv As restated 81.95,500
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