Problem

During the current year, Sports +, Inc., operated two business segments: a chain of surf a...

During the current year, Sports +, Inc., operated two business segments: a chain of surf and dive shops and a small chain of tennis shops. The tennis shops were not profitable and were sold near year-end to another corporation. Sports + operations for the current year are summarized below. The first two captions, "Net sales" and "Costs and expenses," relate only to the company's continuing operations.

Net sales

$12,500,000

Costs and expenses (including applicable income tax)

8,600,000

Operating loss from tennis shops (net of income tax benefit)

192,000

Loss on sale of tennis shops (net of income tax benefit)

 348,000

The company had 182,000 shares of a single class of capital stock outstanding throughout the year.

a.    Prepare a condensed income statement for the year. At the bottom of the statement, show any appropriate earnings per share figures. (A condensed income statement is illustrated in Exhibit 12-2.)


b.   Which earnings per share figure in part a do you consider most useful in predicting future operating results for Sports +. Inc.? Why?

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