![Intermediate Accounting](https://www.bartleby.com/isbn_cover_images/9781259722660/9781259722660_largeCoverImage.gif)
Income statement presentation; Discontinued operations; EPS
• LO4–1, LO4–3, LO4–4, LO4–5
Rembrandt Paint Company had the following income statement items for the year ended December 31, 2018 ($ in thousands):
Net sales | $18,000 |
Interest income | 200 |
Interest expense | 350 |
Cost of goods sold | 10,500 |
Selling and administrative expenses | 2,500 |
Restructuring costs | 800 |
In addition, during the year the company completed the disposal of its plastics business and incurred a loss from operations of $1.6 million and a gain on disposal of the component’s assets of $2 million. 500,000 shares of common stock were outstanding throughout 2018. Income tax expense has not yet been recorded. The income tax rate is 30% on all items of income (loss).
Required:
Prepare a multiple-step income statement for 2018, including EPS disclosures.
![Check Mark](/static/check-mark.png)
Income Statement
The financial statement which reports revenues and expenses from business operations and the result of those operations is reported as net income or net loss for a particular time period is referred to as income statement.
Earnings per Share (EPS)
The share or portion of profit earned by each share is called as earnings per share.
To Prepare: A multiple-step income statement for Company R for 2018, along with EPS disclosure.
Explanation of Solution
Multi -step income statement
A multiple step income statement refers to the income statement that shows the operating, and non-operating activities of the business, under separate head.
Prepare multi-step income statement for Company R for 2018, along with EPS disclosure.
COMPANY  R | ||
Income Statement | ||
For the Year Ended December 31, 2018 | ||
Particulars | Amount ($ in thousands) | Amount ($ in thousands) |
Sales revenue | 18,000 | |
Cost of goods sold | 10,500 | |
Gross profit | 7,500 | |
Less: Operating expenses: | ||
Selling and administrative | 2,500 | |
Restructuring costs | 800 | |
3,300 | ||
Operating income | 4,200 | |
Other income and expense : | ||
Interest revenue | 200 | |
Interest Expenses | (350) | |
Interest income (expense), net | (150) | |
Income from continuing operations before income tax | 4,050 | |
Income tax expense | 1,215 | |
Income from continuing operations | 2,835 | |
Discontinued operations: | ||
Income from operations of discontinued component (a) | 400 | |
Income tax expense (b) | 120 | |
Income on discontinued operations | 280 | |
Net income | 3,115 | |
Earnings per share: | ||
Income from continuing operations (c) | 5.67 | |
Income on discontinued operations (d) | 0.56 | |
Net income | 6.23 |
(Table 1)
Working Notes:
(1)
Calculate Income from operations of discontinued component for Company R
(2)
Calculate Income tax expenses for Company R
(3)
Calculate the EPS for Income from continuing operations
(4)
Calculate the EPS for Income on discontinued operations
Hence, the value of Net income is $3,115 and EPS is $6.23 under the multi-step statement for Company R for the year ended December 31, 2018.
Want to see more full solutions like this?
Chapter 4 Solutions
Intermediate Accounting
- L.L. Bean operates two factories that produce its popular Bean boots (also known as "duck boots") in its home state of Maine. Since L.L. Bean prides itself on manufacturing its boots in Maine and not outsourcing, backorders for its boots can be high. In 2014, L.L. Bean sold about 450,000 pairs of the boots. At one point during 2014, it had a backorder level of about 100,000 pairs of boots. L.L. Bean can manufacture about 2,200 pairs of its duck boots each day with its factories running 24/7. In 2015, L.L. Bean expects to sell more than 500,000 pairs of its duck boots. As of late November 2015, the backorder quantity for Bean Boots was estimated to be about 50,000 pairs. Question: Assume another customer has returned a pair of duck boots (original cost $109) to L.L. Bean. What journal entry would L.L. Bean make to process the return and refund the original purchase price to the customer?arrow_forwardKreeps Corporation produces a single productarrow_forwardA college's food operation has an average meal price of $9.20. Variable costs are $4.35 per meal and fixed costs total $95,000. How many meals must be sold to provide an operating income of $33,000? How many meals would have to be sold if fixed costs declined by 23%? (round to the nearest meal)arrow_forward
- A firm has net working capital of $980, net fixed assets of $4,418, sales of $9,250, and current liabilities of $1,340. How many dollars worth of sales are generated from every $1 in total assets? Need answerarrow_forwardA firm has net working capital of $980, net fixed assets of $4,418, sales of $9,250, and current liabilities of $1,340. How many dollars worth of sales are generated from every $1 in total assets?arrow_forward???arrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
![Text book image](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Text book image](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
![Text book image](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
![Text book image](https://www.bartleby.com/isbn_cover_images/9780134475585/9780134475585_smallCoverImage.gif)
![Text book image](https://www.bartleby.com/isbn_cover_images/9781259722660/9781259722660_smallCoverImage.gif)
![Text book image](https://www.bartleby.com/isbn_cover_images/9781259726705/9781259726705_smallCoverImage.gif)