Question

Problem 4-6 (Static) Income statement presentation; Discontinued operations; EPS (LO4-1, 4-3, 4-4, 4-5) Rembrandt Paint Company had the following income statement items for the year ended December 31, 2021 (S in thousands): Sales revenue Interest revenue Interest expense $ 18,000 100 Cost of goods sold Selling and administrative expense Restructuring costs $ 10,500 2,500 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 500,000 shares of common stock were 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 (Amounts to be deducted should be indicated with a minus sign. Enter your answers in thousands except earnings per share. Round EPS answers to 2 decimal places.) REMBRANDT PAINT COMPANY Income Statement For the Year Ended December 31, 2021 15 in thousands, except per share amounts) 1 L Cost of goods sold Gross profit Operating expenses Seling and administrative expenses Restructuring costs UTTI < Prev 2 of 2 Next

Answer 1

SOLUTION

Multiple-step income statement

Particulars	Amount ($ in thousands)	Amount ($in thousands)
Sales Revenue		18,000
Cost of Goods Sold		10,500
Gross Profit		7,500
Operating Expenses:
Selling and Administrative expenses	2,500
Restructuring Costs	800	(3,300)
Operating Income		4,200
Interest Income (expense) net (100-300)		(200)
Income from continuing operations before income taxes and extra ordinary items		4,000
Income Tax Expense (4,000*25%)		1,000
Income from continuing operations before extra ordinary items		3,000
Discontinued Operations:
Income from Discontinued Operations	(1,600)
Income Tax Expense (1,600*25%)	400
Income on discontinued Operations		(1,200)
Income before extraordinary item
Extra ordinary Gain		2,000
Net Income		3,800
Earnings per share
Income from continuing operations before extraordinary item (3,000,000/500,000)		6
Income from discontinued operations (1,200,000/500,000)		(2.4)
Extraordinary gain (2,000,000/500,000)		4
Net income		7.6