Wildhorse Corp. has 150,620 shares of common stock outstanding. In 2020, the company reports income from continuing operations before income tax of $ 1,221,000. Additional transactions not considered in the $ 1,221,000 are as follows. 1. In 2020, Wildhorse Corp. sold equipment for $ 35,800. The machine had originally cost $ 84,300 and had accumulated depreciation of $ 33,900. The gain or loss is considered non-recurring. 2. The company discontinued operations of one of its subsidiaries during the current year at a loss of $ 191,200 before taxes. Assume that this transaction meets the criteria for discontinued operations. The loss from operations of the discontinued subsidiary was $ 91,100 before taxes; the loss from disposal of the subsidiary was $ 100,100 before taxes. 3. An internal audit discovered that amortization of intangible assets was understated by $ 39,300 (net of tax) in a prior period. The amount was charged against retained earnings. 4. The company recorded a non-recurring gain of $ 126,600 on the condemnation of some of its property (included in the $ 1,221,000). Analyze the above information and prepare an income statement for the year 2020, starting with income from continuing operations before income tax. Compute earnings per share as it should be shown on the face of the income statement. (Assume a total effective tax rate of 19% on all items, unless otherwise indicated.) (Round earnings per share to 2 decimal places, e.g. 1.47.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Wildhorse Corp. has 150,620 shares of common stock outstanding. In 2020, the company reports income from continuing operations before income tax of $ 1,221,000. Additional transactions not considered in the $ 1,221,000 are as follows.

1.		In 2020, Wildhorse Corp. sold equipment for $ 35,800. The machine had originally cost $ 84,300 and had accumulated depreciation of $ 33,900. The gain or loss is considered non-recurring.
2.		The company discontinued operations of one of its subsidiaries during the current year at a loss of $ 191,200 before taxes. Assume that this transaction meets the criteria for discontinued operations. The loss from operations of the discontinued subsidiary was $ 91,100 before taxes; the loss from disposal of the subsidiary was $ 100,100 before taxes.
3.		An internal audit discovered that amortization of intangible assets was understated by $ 39,300 (net of tax) in a prior period. The amount was charged against retained earnings.
4.		The company recorded a non-recurring gain of $ 126,600 on the condemnation of some of its property (included in the $ 1,221,000).

Analyze the above information and prepare an income statement for the year 2020, starting with income from continuing operations before income tax. Compute earnings per share as it should be shown on the face of the income statement. (Assume a total effective tax rate of 19% on all items, unless otherwise indicated.) (Round earnings per share to 2 decimal places, e.g. 1.47.)

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