Question

Esquire Comic Book Company had income before tax of $1,900,000 in 2021 before considering the following material items: 1. Esquire sold one of its operating divisions, which qualified as a separate component according to generally accepted accounting principles. The before-tax loss on disposal was $430,000. The division generated before-tax income from operations from the beginning of the year through disposal of $680,000. 2. The company incurred restructuring costs of $95,000 during the year. Required: Prepare a 2021 income statement for Esquire beginning with income from continuing operations. Assume an income tax rate of 25%. Ignore EPS disclosures. (Amounts to be deducted should be indicated with a minus sign.) ESQUIRE COMIC BOOK COMPANY Partial Income Statement For the Year Ended December 31, 2021 Income from continuing operations Discontinued operations: $ 1,353,750 Income from operations of discontinued component [Loss on discontinued operations Net income (loss)

Answer 1

Answer
Partial income statement
income from continuing operations					$      1,353,750
discontinued operations:
income from operations of discontinued component					$         250,000
income tax expenses @25% of 250000					-$          62,500
income from operations of discontinued component					$         187,500
Net income					$      1,541,250
Income from continuing operations
income before additional items					$      1,900,000
less: restructuring cost					-$          95,000
Income before tax					$      1,805,000
less: tax@ 25%					-$        451,250
Income from continuing operations					$      1,353,750