Question

Presented below are selected ledger accounts of Sunland Corporation as of December 31, 2020.

Cash		$52,000
Administrative expenses		104,000
Selling expenses		83,200
Net sales		561,600
Cost of goods sold		218,400
Cash dividends declared (2020)		20,800
Cash dividends paid (2020)		15,600
Discontinued operations (loss before income taxes)		41,600
Depreciation expense, not recorded in 2019		31,200
Retained earnings, December 31, 2019		93,600
Effective tax rate 20%

Compute net income for 2020.

Net income

$

Prepare a partial income statement beginning with income from continuing operations before income tax, and including appropriate earnings per share information. Assume 10,000 shares of common stock were outstanding during 2020. (Round earnings per share to 2 decimal places, e.g. 1.58.)

Answer 1

a.

Particulars	Amount ($)
Net sales	561600
Less: Cost of goods sold	(218400)
Gross profit	$343200
Less: Administrative expenses	(104000)
Less: Selling expenses	(83200)
Income before tax	$156000
Income tax (156000 * 20%)	(31200)
Income from continuing operation	$124800
Discontinued operation loss (41600 * 80%)	(33280)
Net income	$91520

b.

Particulars	Amount ($)
Income from continuing operation before tax	156000
Less: Income tax	(31200)
Income from continuing operations	124800
Less: Discontinuing operations, net of tax	(33280)
Net income / Loss	91520
Earning per share:
Income from continuing operations (124800 / 10,000)	12.48
Less: Loss on discontinued operations, net of tax	(3.33)
Net income / Loss	$9.15