Selected information about income statement accounts for the Reed Company is presented below (the company's fiscal year ends on December 31):      2018   2017 Sales $ 4,550,000 $ 3,650,000 Cost of goods sold   2,890,000   2,030,000 Administrative expenses   830,000   705,000 Selling expenses   390,000   342,000 Interest revenue   153,000   143,000 Interest expense   206,000   206,000 Loss on sale of assets of discontinued component   62,000   —    On July 1, 2018, 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, 2018, for $62,000 less than their book value. Results of operations for the component (included in the above account balances) were as follows:    1/1/18-9/30/18   2017   Sales   $ 430,000       $ 530,000   Cost of goods sold     (305,000 )       (338,000 ) Administrative expenses     (53,000 )       (43,000 ) Selling expenses     (23,000 )       (33,000 ) Operating income before taxes   $ 49,000       $ 116,000      In addition to the account balances above, several events occurred during 2018 that have not yet been reflected in the above accounts: A fire caused $53,000 in uninsured damages to the main office building. The fire was considered to be an infrequent but not unusual event. Inventory that had cost $43,000 had become obsolete because a competitor introduced a better product. The inventory was sold as scrap for $6,000. Income taxes have not yet been recorded. Compute -  a multiple-step income statement for the Reed Company for 2018, showing 2017 information in comparative format, including income taxes computed at 30% and EPS disclosures assuming 400,000 shares of common stock. (Amounts to be deducted should be indicated with a minus sign. Round EPS answers to 2 decimal places.)

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Selected information about income statement accounts for the Reed Company is presented below (the company's fiscal year ends on December 31):
 

    2018   2017
Sales $ 4,550,000 $ 3,650,000
Cost of goods sold   2,890,000   2,030,000
Administrative expenses   830,000   705,000
Selling expenses   390,000   342,000
Interest revenue   153,000   143,000
Interest expense   206,000   206,000
Loss on sale of assets of discontinued component   62,000  
 

 
On July 1, 2018, 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, 2018, for $62,000 less than their book value. Results of operations for the component (included in the above account balances) were as follows:
 

  1/1/18-9/30/18   2017  
Sales   $ 430,000       $ 530,000  
Cost of goods sold     (305,000 )       (338,000 )
Administrative expenses     (53,000 )       (43,000 )
Selling expenses     (23,000 )       (33,000 )
Operating income before taxes   $ 49,000       $ 116,000  
 

 
In addition to the account balances above, several events occurred during 2018 that have not yet been reflected in the above accounts:

  1. A fire caused $53,000 in uninsured damages to the main office building. The fire was considered to be an infrequent but not unusual event.
  2. Inventory that had cost $43,000 had become obsolete because a competitor introduced a better product. The inventory was sold as scrap for $6,000.
  3. Income taxes have not yet been recorded.

Compute -  a multiple-step income statement for the Reed Company for 2018, showing 2017 information in comparative format, including income taxes computed at 30% and EPS disclosures assuming 400,000 shares of common stock. (Amounts to be deducted should be indicated with a minus sign. Round EPS answers to 2 decimal places.)

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