Question

Selected information about income statement accounts for the Reed Company is presented below (the company's fiscal year ends on December 31): Sales revenue Cost of goods sold Administrative expense Selling expense Interest revenue Interest expense Loss on sale of assets of discontinued component 2021 $4,600,000 2,900,000 840,000 400,000 154,000 208,000 64,000 2020 $3,700,000 2,040,000 715,000 342,000 144,000 208,000 On July 1, 2021, the company adopted a plan to discontinue a division that qualifies as a component of an entity as defined by GAAP. The assets of the component were sold on September 30, 2021, for $64,000 less than their book value. Results of operations for the component (included in the above account balances) were as follows: Sales revenue Cost of goods sold Administrative expense Selling expense Operating income before taxes 1/1/2021-9/30/2021 $ 440,000 (310,000) (54,000) (24,000) $ 52,000 2020 $ 540,000 (344,000) (44,000) (24,000) $ 128,000 In addition to the account balances above, several events occurred during 2021 that have not yet been reflected in the above accounts: 1. A fire caused $54.000 in uninsured damages to the main office building. The fire was considered to be an unusual event. 2. Inventory that had cost $44,000 had become obsolete because a competitor introduced a better product. The inventory was written down to its scrap value of $7,000. 3. Income taxes have not yet been recorded. Required: Prepare a multiple-step income statement for the Reed Company for 2021, showing 2020 information in comparative format, including income taxes computed at 25% and EPS disclosures assuming 500,000 shares of outstanding common stock. (Amounts to be deducted should be indicated with a minus sign. Round EPS answers to 2 decimal places.)
please complete income statement

Answer 1

  INCOME STATEMENT

Particular	2021	2021	2020	2020
Sales		$4600000		$3700000
(-) cost of goods sold		($2900000)		($2040000)
Gross profit		1700000		1660000
Operating expenses
Administrative expenses	($840000)		($715000)
Selling expenses	($400000)		($342000)
Total operating expenses		($1240000)		($1057000)
Operating profit		$460000		$603000
Non operating and other expenses
Interest revenue	$154000		$144000
(-)interest expenses	($208000)		($208000)
(-)loss on sale of asset of discontinued component	($64000)
(-)loss due to fire	($54000)
(-) cost of inventory becoming absolete	($44000)
+ Sale of inventory junk	$7000
Net operating expenses		($209000)		($64000)
Profit for year		$251000		$539000
(-)tax 25%	(62750)		(134750)
Profit after tax(PAT)		$188250		$404250
Shares outstanding		500000		500000
Earing per share (EPS) =PAT/SHARES OUTSTANDING		0.3765		0.8085

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