Question

Wildhorse Corp. has 150,620 shares of common stock outstanding. In 2020, the company reports income from continuing operations before income tax of $1,221,000. Additional transactions not considered in the $1,221.000 are as follows. 1. In 2020, Wildhorse Corp. sold equipment for $35,800. The machine had originally cost $84,300 and had accumulated depreciation of $33,900. The gain or loss is considered non-recurring. 2. The company discontinued operations of one of its subsidiaries during the current year at a loss of $191,200 before taxes. Assume that this transaction meets the criteria for discontinued operations. The loss from operations of the discontinued subsidiary was $91,100 before taxes; the loss from disposal of the subsidiary was $100,100 before taxes. 3. An internal audit discovered that amortization of intangible assets was understated by $39,300 (net of tax) in a prior period. The amount was charged against retained earnings. 4. The company recorded a non-recurring gain of $126.600 on the condemnation of some of its property (included in the $1,221,000). Analyze the above information and prepare an income statement for the year 2020, starting with income from continuing operations before income tax. Compute earnings per share as it should be shown on the face of the income statement. (Assume a total effective tax rate of 19% on all items, unless otherwise indicated.) (Round earnings per share to 2 decimal places, e.g. 1.47.)

Answer 1

WILDHORSE CORP. Income Statement (Partial) For the Year Ended December 31, 2020 $ 1,206,400.00 $ 229,216.00 $ 977,184.00 Income From Continuing Operations before Income tax Income Tax Income From Continuing Operations Discontinued Operations Loss from Operations of discontinued subsidary Less : Applicable income tax Reduction Loss from disposal subsidary Less : Applicable income tax Reduction $ 73,791.00 $ 91,100.00 $ 17,309.00 $ 100,100.00 $ 19,019.00 $ 81,081.00 $ 154,872.00 $ 822,312.00 Net Income / (loss) Earnings per share Income From Continuing Operations Discontinued operations, Net of Tax Net Income / (loss) to ta ta 6.49 (1.03) 5.46

FCDDF000 [Last saved by user] - Microsoft Excel - O X Home Insert Page Layout Formulas Data Review View fir E DE A E Calculate Now - More Functions Insert AutoSum Recently Financial Logical Text Date & Lookup & Math Function - Used Time Reference - & Trig Function Library A19 - fx Define Name Use in Formula Name Manager Create from Selection Defined Names Trace Precedents Show Formulas Trace Dependents Error Checking Watch Remove Arrows Evaluate Formula Window Formula Auditing Calculation calculate Sheet Options Calculation WILDHORSE CORP Income Statement (Partial) For the Year Ended December 31, 2020 =1221000-14600 =D5*19% =D5-D6 5 Income From Continuing Operations before Income tax 6 Income Tax 7 Income From Continuing Operations 8 Discontinued Operations 9 Loss from Operations of discontinued subsidary Less : Applicable income tax Reduction 11 Loss from disposal subsidary Less : Applicable income tax Reduction =B9-B10 91100 -B9*19% 100100 =B11*19% =B11-B12 -C10+C12 =D7-013 14 Net Income / (loss) Earnings per share Income From Continuing Operations 17 Discontinued operations, Net of Tax 18 Net Income / (loss) 19 =D7/150620 --D13/150620 D14/150620 21 22 H S heet110 Sheet111 Sheet112 Sheet113 Sheet114 Sheet115 Sheet116 Sheet118 February January Ready Average: 269456.7799 Count: 30 Sum: 3772394.919 BO U 100% + + O Search the web and your PC o pt e 9 0 3:53 PM 2/10/2020 OR A l 1% B