Question

Income Statement, Lower Portion At the beginning of 2019, Cameron Company's retained earnings was $226,500. For 2019, Cameron has calculated its pretax income from continuing operations to be $216,000. During 2019, the following events also occurred: 1. During July, Cameron sold Division M (a component of the company). It has determined that the pretax income from the operations of Division M during 2019 totals $43,300 and that a pretax loss of $46,300 was incurred on the sale of Division M. 2. Cameron had 35,000 shares of common stock outstanding during all of 2019. It declared and paid a $1 per share cash dividend on this stock. Required: Assuming that all the pretax items are subject to a 30% income tax rate: 1. Complete the lower portion of Cameron's 2019 income statement, beginning with "Pretax Income from Continuing Operations." Round earnings per share computations to two decimal places.

Answer 1

CAMERON COMPANY Income Statement For The Year Ended December 31st, 2019 Pre-tax Income from Continuing Operations Less: Income tax Income from Continuing Operations $216,000 $64,800 $151,200 A Results from Discontinued operations: Income from operations (net of tax) 43,300*70% Loss on disposal (net of tax) $46,300*70% Net Income $30,310 -$32,410 -$2,100B $149,100 Components of Income Earnings per share from continuing operations Earnings per share from discontinued operations Earnings per share on net income EPS $4.32 A/35,000 shares $0.06 B/35,000 shares $4.26 CAMERON COMPANY Statement of Retained Earnings For The Year Ended December 31st, 2019 Opening balance Add: Net Income during the year $226,500 $149,100 $375,600 $35,000 $340,600 Less: Dividend paid Closing balance