Question

Blossom Corporation had income from continuing operations of $755,000 (after taxes) in 2020. In addition, the following information, which has not been considered, is as follows.

1.		A machine was sold for $148,000 cash during the year at a time when its book value was $118,000. (Depreciation has been properly recorded.) The company often sells machinery of this type.
2.		Blossom decided to discontinue its stereo division in 2020. During the current year, the loss on the disposal of this component of the business was $206,000 less applicable taxes.

Present in good form the income statement of Blossom Corporation for 2020 starting with "income from continuing operations." Assume that Blossom's tax rate is 30% and 200,000 shares of common stock were outstanding during the year. (Round per share values to 2 decimal places, e.g. $1.48.)

Answer 1

Blossom Corporation Partial Income Statement For the Year Ended 2020 Income from continuing operations $ 776,000 Discontinued operations Loss on disposal of a component of a business net of taxes $ 144,200 Net income $ 631,800 Earning per Common Share : Income from continuing operations $ 3.88 Loss on discontinued operations $ 0.72 Net income $ 3.16 Working Notes: Income from continuing operations Income continuing operations before adjustment $ 755,000 Add: Gain on sale of machinery after tax $ 21,000 ($148,000-$118,000)*(1-30) Income from continuing operations $ 776,000 Loss on disposal of a component of a business net of taxes = $206,000*(1-.30) = $144.200 Earnings per common share : Income from Continuing operations = $776,000/200,000 = $3.88 Loss on discontinued operations = $144,200/200,000 = $0.72 Net Income = $631,800/200,000 = $3.16