Question

P 4-6 Income statement presentation; discontinued operations; EPS LO4-1, LO4-3, LO4-4, L04-5 Rembrandt Paint Company had the following income statement items for the year ended December 31, 2021 ($ in thousands): $18,000 Sales revenue Interest revenue 100 Interest expense 300 Cost of goods sold 10,500 Selling and administrative expense 2,500 800 Restructuring costs Page 221 In addition, during the year, the company completed the disposal of its plastics business and incurred a loss from operations of $1.6 million and a gain on disposal of the component's assets of $2 million. There were 500,000 shares of common stock outstanding throughout 2021. Income tax expense has not yet been recorded. The income tax rate is 25% on all items of income (loss) Required: Prepare a multiple-step income statement for 2021, including EPS disclosures. Use a Illustration 4-4 of this chapter to prepare income multiple-step format similar to from continuing operations, and then add to this the discontinued operations portion of the income statement

Answer 1

$18,000 $10.500 $7,500 $2.500 $800 $3.300 $4.200 REMBRANDT PAINT COMPANY Income Statement For the year ended December 31, 2021 (S in thousands) Sales revenue Less: Cost of goods sold Gross Profit Operating expenses Selling and administrative expense Restructuring costs Operating income Other Income (Expense) Interest revenue Interest expense Other Income (Expense), net Income from continuing operations before income taxes Less: Income tax expense ($4.000 * 25%) Income from continuing operations Discontinued operations Income from operations of discontinued component ($2,000 - $1,600) Less: Income tax expense ($400 * 25%) Income on discontinued operations Net Income $100 $300 -$200 $4.000 $1.000 $3,000 $400 $100 $300 $3,300 Earnings per share: Income from continuing operations ($3,000 / 500) Income on discontinued operations ($300 / 500) Net Income $6.00 $0.60 $6.60 Note: 500 thousands shares (i.e; 500,000 shares).