Question

For the year ended December 31, 2020, Sweet Corporation had income before taxes and discontinued operations of $1,020,000. During the year, Sweet disposed of one of its business segments for a gain of $350,000 before tax. Sweet had 50,000 common shares outstanding during the year. The company was subject to a 30% income tax rate. Prepare the income statement for Sweet Corporation beginning with the line "Income from continuing operations before income tax." (Round earnings per share values to 2 decimal places, e.g. 15.25.) Sweet Corporation Partial Income Statement Basic Earnings per share: e Textbook and Media

Answer 1

Income statement

Income from continuing operations before tax	1,020,000
Income tax expense	- 306,000
Income from continuing operations after tax	714,000
Income from discontinued operations :Gain on disposal of business segment, net of taxes (350,000 - 350,000 x 30%)	245,000
Net income	959,000
Basic earnings per share:
Income from continuing operations after tax (Income from continuing operations after tax/Number of common shares = 714,000/50,000)	$14.28
Income from discontinued operations (Income from discontinued operations after tax/Number of common shares = 245,000/50,000)	$4.9
Basic earnings per share	$19.18

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