Question

12. (5 points) Pederson, Inc. has the following data for the year ended December 31, 2017: Net sales.. Loss from discontinued operations ........... Cost of goods sold. Interest expense ............... ........... Selling, general, and administrative expenses ......... ....... $987,000 24,000 240,000 11,000 325,000 Assume Pederson's tax rate was 20% on all items. Also assume Pederson had 42,000 shares of common stock outstanding throughout the year. Prepare an income statement in good form for the year 2017. Round your EPS figure to the nearest penny.

Answer 1

Pederson's Inc.
Income Statement
For the year ended December 31, 2017
Net Sales		$987,000
Less: Cost of Goods Sold		($240,000)
Gross Profit Margin		$747,000
Less: Operating Expenses:
Selling, general and administrative expenses	($325,000)
Less: Other Expenses:
Interest Expense	($11,000)
Income before income taxes		$411,000
Less: Income Tax ($411,000*20/100)		($82,200)
Income from Continuing Operations		$328,800
Less: Loss from discontinued operations	$24,000
Less: Tax ($24,000*20/100)	($4,800)	$19,200
Net Income		$309,600
Earnings per share:
Income from Continuing Operations ($328,800/42,000 shares)		$7.83
Loss from Discontinued Operations ($19,200/42,000 shares)		($0.46)
Net Income ($309,600/42,000 shares)		$7.37