Instructions On the basis of this information, answer the following questions. Show any necessary computa- tions and explain your reasoning. b. a. What would JPI's net income have been for 2021 if it had not sold the baseball team? Assume that for 2022 you expect a 7 percent increase in the profitability of JPI's newspaper business but had projected a $2,000,000 operating loss for the baseball team if JPI had contin ued to operate the team in 2022. What amount would you forecast as JPI's 2022 net income if the company had continued to own and operate the baseball team? c. Given your assumptions in part b, but given that JPI did sell the baseball team in 2021, what would you forecast as the company's estimated net income for 2022? d. Assume that the expenses of operating the baseball team in 2021 amounted to $7,200,000, net of any related income tax effects. What was the team's net revenue for the year?

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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LO12-2
CASE 12.2
Is There Life without
Baseball?
Jackson Publishing, Inc. (P1), publishes two newspapers and, until recently, owned a professional
baseball team. The baseball team had been losing money for several years and was sold at the end
of 2021 to a group of investors who plan to move it to a larger city. Also in 2021, JPI suffered an
unusual and infrequent loss when its Raytown printing plant was damaged by a tornado. The dam-
age has since been repaired. A condensed income statement follows.
JACKSON PUBLISHING, INC.
INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2021
Net revenue
Costs and expenses
Income from continuing operations
Discontinued operations:
Operating loss on baseball team..
Gain on sale of baseball team
Net income
$(1,300,000)
3,700,000
$41,000,000
36,500,000
$ 4,500,000
3,400,000
$ 6,900,000
Instructions
On the basis of this information, answer the following questions. Show any necessary computa-
tions and explain your reasoning.
a. What would JPI's net income have been for 2021 if it had not sold the baseball team?
b. Assume that for 2022 you expect a 7 percent increase in the profitability of JPI's newspaper
business but had projected a $2,000,000 operating loss for the baseball team if JPI had contin-
ued to operate the team in 2022. What amount would you forecast as JPI's 2022 net income if
the company had continued to own and operate the baseball team?
c.
Given your assumptions in part b, but given that JPI did sell the baseball team in 2021, what
would you forecast as the company's estimated net income for 2022?
d. Assume that the expenses of operating the baseball team in 2021 amounted to $7,200,000, net
of any related income tax effects. What was the team's net revenue for the year?
Transcribed Image Text:LO12-2 CASE 12.2 Is There Life without Baseball? Jackson Publishing, Inc. (P1), publishes two newspapers and, until recently, owned a professional baseball team. The baseball team had been losing money for several years and was sold at the end of 2021 to a group of investors who plan to move it to a larger city. Also in 2021, JPI suffered an unusual and infrequent loss when its Raytown printing plant was damaged by a tornado. The dam- age has since been repaired. A condensed income statement follows. JACKSON PUBLISHING, INC. INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2021 Net revenue Costs and expenses Income from continuing operations Discontinued operations: Operating loss on baseball team.. Gain on sale of baseball team Net income $(1,300,000) 3,700,000 $41,000,000 36,500,000 $ 4,500,000 3,400,000 $ 6,900,000 Instructions On the basis of this information, answer the following questions. Show any necessary computa- tions and explain your reasoning. a. What would JPI's net income have been for 2021 if it had not sold the baseball team? b. Assume that for 2022 you expect a 7 percent increase in the profitability of JPI's newspaper business but had projected a $2,000,000 operating loss for the baseball team if JPI had contin- ued to operate the team in 2022. What amount would you forecast as JPI's 2022 net income if the company had continued to own and operate the baseball team? c. Given your assumptions in part b, but given that JPI did sell the baseball team in 2021, what would you forecast as the company's estimated net income for 2022? d. Assume that the expenses of operating the baseball team in 2021 amounted to $7,200,000, net of any related income tax effects. What was the team's net revenue for the year?
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