Sunland Inc. reported income from continuing operations before taxes during 2017 of $817,900. Additional transactions occurring in 2017 but not considered in the $817,900 are as follows. 1. The corporation experienced an uninsured flood loss in the amount of $99,000 during the year. 2. At the beginning of 2015, the corporation purchased a machine for $68,400 (salvage value of $11,400) that had a useful life of 6 years. The bookkeeper used straight-line depreciation for 2015, 2016, and 2017, 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 $61,900 (pretax). 4. When its president died, the corporation realized $140,000 from an insurance policy. The cash surrender value of this policy had been carried on the books as an investment in the amount of $45,650 (the gain is nontaxable). 5. The corporation disposed of its recreational division at a loss of $104,710 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 2015 income by $62,970 and decrease 2016 income by $19,590 before taxes. The FIFO method has been used for 2017. The tax rate on these items is 40%. Prepare an income statement for the year 2017 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 112,280 shares. (Assume a tax rate of 30% on all items, unless indicated otherwise.) (Round earnings per share to 2 decimal places, e.g. 1.48 and all other answers to 0 decimal places, e.g. 5,275.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Sunland Inc. reported income from continuing operations before taxes during 2017 of $817,900. Additional transactions occurring in 2017 but not considered in the $817,900 are as follows.

1.		The corporation experienced an uninsured flood loss in the amount of $99,000 during the year.
2.		At the beginning of 2015, the corporation purchased a machine for $68,400 (salvage value of $11,400) that had a useful life of 6 years. The bookkeeper used straight-line depreciation for 2015, 2016, and 2017, 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 $61,900 (pretax).
4.		When its president died, the corporation realized $140,000 from an insurance policy. The cash surrender value of this policy had been carried on the books as an investment in the amount of $45,650 (the gain is nontaxable).
5.		The corporation disposed of its recreational division at a loss of $104,710 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 2015 income by $62,970 and decrease 2016 income by $19,590 before taxes. The FIFO method has been used for 2017. The tax rate on these items is 40%.

Prepare an income statement for the year 2017 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 112,280 shares. (Assume a tax rate of 30% on all items, unless indicated otherwise.) (Round earnings per share to 2 decimal places, e.g. 1.48 and all other answers to 0 decimal places, e.g. 5,275.)

SUNLAND INC. Income Statement (Partial) For the year ended 12/31/2017
Income from Continuing Operations before income tax		$ ________
Income tax expense		__________
Income from continuing operations		__________
Discontinued Operations
Loss from Disposal of Recreational Division	$ 104710
Less: Applicable Income Tax Reduction	31413	73297
Net Income/ (Loss)		$_________

Earnings Per Share:
Income from Continuing Operations		$ _________
Discontinued Operations		.65
Net Income/ Loss		$ _________

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