Chap004

Chap004 - Student Name: Instructor Class: McGraw-Hill/Irwin...

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Student Name: Instructor Class: McGraw-Hill/Irwin Problem 04-01 REED COMPANY Comparative Income Statements for the Years Ended December 31 2011 2010 Sales revenue $4,000,000 $3,000,000 Cost of goods sold 2,570,000 1,680,000 Gross profit 1,430,000 1,320,000 Operating expenses: Administrative 750,000 635,000 Selling 340,000 282,000 Loss from fire damage 50,000 Loss from write-down of obsolete inventory 35,000 Total operating expenses 1,175,000 917,000 Operating income 255,000 403,000 Other income (expense): Interest revenue 150,000 140,000 Interest expense (200,000) (200,000) Total other expenses (net) (50,000) (60,000) Income from continuing operations before income taxes and extraordinary item 205,000 343,000 Income tax expense 82,000 137,200 Income from continuing operations before extraordinary item 123,000 205,800 Discontinued operations: Income (loss) from operations of discontinued component (including loss on disposal of $50,000 in 2011) (10,000) 110,000 Income tax benefit (expense) 4,000 (44,000) Income (loss) on discontinued operations (6,000) 66,000 Income before extraordinary item 117,000 271,800 Extraordinary item: Loss from earthquake (net of $40,000 tax benefit) (60,000) Net income $57,000 $271,800 Correct! Correct! Earnings per share: 300,000 shares Income from continuing operations before extraordinary item $0.41 $0.69 Discontinued operations (0.02) 0.22 Extraordinary loss (0.20) Net income $0.19 $0.91 Correct! Correct!
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Given Data P04-01: REED COMPANY 2011 2010 Sales $4,400,000 $3,500,000 Cost of goods sold 2,860,000 2,000,000 Administrative expenses 800,000 675,000 Selling expenses 360,000 312,000 Interest revenue 150,000
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Chap004 - Student Name: Instructor Class: McGraw-Hill/Irwin...

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