Maher Inc. reported income from continuing operations before taxes during 2020 of $790,000. Additional transactions occurring in 2020 but not considered in the $790,000 are as follows. 1. The corporation experienced an uninsured flood loss in the amount of $90,000 during the year. 2. At the beginning of 2018, the corporation purchased a machine for $54,000 (salvage value of $9,000) that had a useful life of 6 years. The bookkeeper used straight-line depreciation for 2018, 2019, and 2020, but failed to deduct the salvage value in computing the depreciation base. 3. Sale of securities held as a part of its portfolio resulted in a loss of $57,000 (pretax). 4. When its president died, the corporation realized $150,000 from an insurance policy. The cash surrender value of this policy had been carried on the books as an investment in the amount of $46,000 (the gain is nontaxable). 5. The corporation disposed of its recreational division at a loss of $115,000 before taxes. Assume that this transaction meets the criteria for discontinued operations. 6. The corporation decided to change its method of inventory pricing from average-cost to the FIFO method. The effect of this change on prior years is to increase 2018 income by $60,000 and decrease 2019 income by $20,000 before taxes. The FIFO method has been used for 2020. The tax rate on these items is 30%. Instructions: Prepare an income statement for the year 2020 starting with income from continuing operations before taxes. Compute earnings per share as it should be shown on the face of the income statement. Common shares outstanding for the year are 120,000 shares. (Assume a tax rate of 30% on all items, unless indicated otherwise.) Computation of income from continuing operations before taxes: As previously stated 790,000 Computation of income from continuing operations before taxes: $ 790,000 As previously stated Computation of income tax: MAHER INC. Income Statement (Partial) For the Year Ended December 31, 2020 Per share of common stock:
Maher Inc. reported income from continuing operations before taxes during 2020 of $790,000. Additional transactions occurring in 2020 but not considered in the $790,000 are as follows. 1. The corporation experienced an uninsured flood loss in the amount of $90,000 during the year. 2. At the beginning of 2018, the corporation purchased a machine for $54,000 (salvage value of $9,000) that had a useful life of 6 years. The bookkeeper used straight-line depreciation for 2018, 2019, and 2020, but failed to deduct the salvage value in computing the depreciation base. 3. Sale of securities held as a part of its portfolio resulted in a loss of $57,000 (pretax). 4. When its president died, the corporation realized $150,000 from an insurance policy. The cash surrender value of this policy had been carried on the books as an investment in the amount of $46,000 (the gain is nontaxable). 5. The corporation disposed of its recreational division at a loss of $115,000 before taxes. Assume that this transaction meets the criteria for discontinued operations. 6. The corporation decided to change its method of inventory pricing from average-cost to the FIFO method. The effect of this change on prior years is to increase 2018 income by $60,000 and decrease 2019 income by $20,000 before taxes. The FIFO method has been used for 2020. The tax rate on these items is 30%. Instructions: Prepare an income statement for the year 2020 starting with income from continuing operations before taxes. Compute earnings per share as it should be shown on the face of the income statement. Common shares outstanding for the year are 120,000 shares. (Assume a tax rate of 30% on all items, unless indicated otherwise.) Computation of income from continuing operations before taxes: As previously stated 790,000 Computation of income from continuing operations before taxes: $ 790,000 As previously stated Computation of income tax: MAHER INC. Income Statement (Partial) For the Year Ended December 31, 2020 Per share of common stock:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Maher Inc. reported income from continuing operations before taxes during 2020 of $790,000.
Additional transactions occurring in 2020 but not considered in the $790,000 are as follows.
1. The corporation experienced an uninsured flood loss in the amount of $90,000 during the
year.
2. At the beginning of 2018, the corporation purchased a machine for $54,000 (salvage value
of $9,000) that had a useful life of 6 years. The bookkeeper used straight-line depreciation
for 2018, 2019, and 2020, but failed to deduct the salvage value in computing the
depreciation base.
3. Sale of securities held as a part of its portfolio resulted in a loss of $57,000 (pretax).
4. When its president died, the corporation realized $150,000 from an insurance policy. The
cash surrender value of this policy had been carried on the books as an investment in the
amount of $46,000 (the gain is nontaxable).
5.
The corporation disposed of its recreational division at a loss of $115,000 before taxes.
Assume that this transaction meets the criteria for discontinued operations.
6. The corporation decided to change its method of inventory pricing from average-cost to
the FIFO method. The effect of this change on prior years is to increase 2018 income by
$60,000 and decrease 2019 income by $20,000 before taxes. The FIFO method has been
used for 2020. The tax rate on these items is 30%.
Instructions:
Prepare an income statement for the year 2020 starting with income from continuing operations
before taxes. Compute earnings per share as it should be shown on the face of the income
statement. Common shares outstanding for the year are 120,000 shares. (Assume a tax rate of
30% on all items, unless indicated otherwise.)
Computation of income from continuing operations before taxes:
As previously stated
790,000
Transcribed Image Text:Computation of income from continuing operations before taxes:
$ 790,000
As previously stated
Computation of income tax:
MAHER INC.
Income Statement (Partial)
For the Year Ended December 31, 2020
Per share of common stock:
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 3 images
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education