Question

Esquire Comic Book Company had income before tax of $1750,000 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 $415,000. The division generated before-tax income from operations from the beginning of the year through disposal of $650,000. 2. The company incurred restructuring costs of $80,000 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.) od ESQUIRE COMIC BOOK COMPANY Partial income Statement For the Year Ended December 31, 2021 Income from continuing operations Discontinued operations: erences Net Income (loss)

Answer 1

Esquire Comic Book Company Partial Income Statement For the Year Ended December 31, 2021 Income from continuing operations (a) $1,252,500 Discontinued operations: Income from operations of discontinued component $235,000| (S650,000 - $415,000) Less: Income tax expense (25%* $235,000) $58,750 Income on discontinued operations (6) $176,250 $1,428,750 Net income (a + b) workings: Income from continuing operations: Income before considering additional items Less: restructuring costs Income from continuing operations before tax Less:Income tax expense (25% * $1,670,000) Income from continuing operations $1,750,000 $80,000 $1,670,000 $417,500 $1,252,500