Question

Problem 4-6 (Algo) 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 ($ in thousands): Sales revenue $ 28,000 Interest 300 revenue Interest 500 expense Cost of goods sold Selling and administrative expense Restructuring costs $ 15,500 3,500 1,800 In addition, during the year the company completed the disposal of its plastics business and incurred a loss from operations of $2.6 million and a gain on disposal of the component's assets of $4 million. 700,000 shares of common stock were outstanding throughout 2021. Income tax expense has not yet been recorded. The income tax rate is 25% on all items of income (loss). Required: Prepare a multiple-step income statement for 2021, including EPS disclosures. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in thousands except earnings per share. Round EPS answers to 2 decimal places.) REMBRANDT PAINT COMPANY Income Statement For the Year Ended December 31, 2021 ($ in thousands, except per share amounts) Sales revenue Cost of goods sold Gross profit Operating expenses: Selling and administrative expenses $ 3,500 Restructuring costs 1,800 $ 28,000 (15,500) 12,500 5,300 7,200 300 (500) (200) 7,000 1,750 5,250 Operating income Other income (expense) Interest revenue Interest expense Other income, net Income from continuing operations before income taxes Income tax expense Income from continuing operations Discontinued operations: Income from operations of discontinued component Income tax expense Income on discontinued operations Net income Earnings per share: Income from continuing operations Income on discontinued operations Net income 0 5,250 $

Answer 1

Rembrandt paint company Income statement (in thousands) Sales revenue Cost of goods sold Gross profit Operating expenses Selling and admin expenses Restructuring costs 28,000 -15,500 12,500 -3,500 -1,8001 -5,300 7,200 300 -500 -200 7,000 -1,750 5,250 Operating income Other income (expense) Interest revenue Interest expense Other income, net Income from continuing operations before income taxes Income tax expense Income from continuing operations Discontinued operations Income from operations of discontinued component Income tax expense Income on discontinued operations Net income Earning per share Income from continuing operations Income on discontinued operations Net income 1,400 -350 1,050 6,300 9 5,250 1,050 6,300 Income from operations of discontinued operations include both loss from operations and gain of disposal 4,000,000 - 2,600,000 = 1,400,000 Earning per share = Net income/no. of shares 6,300,000 700000 9 Tax is calucalated at 25% on income from continuing and discontinued operations