HW#2 - Name:_ Accounting 350 Homework #2 Due on Thursday,...

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Name :_________________________________________ Accounting 350 – Homework #2 Due on Thursday, October 20th 1. The following condensed statements of the Lewis Holding Company are presented for the two years ended December 31, 2011 and 2010: 2011 2010 Sales $15,000,000 $9,600,000 Cost of goods sold 9,200,000 6,000,000 Gross profit 5,800,000 3,600,000 Operating expenses 3,200,000 2,600,000 Operating income 2,600,000 1,000,000 Gain on Sale of Assets 50,000 Impairment loss on assets of division held for sale (200,000) - 2,450,000 1,000,000 Income tax expense (40%) 980,000 400,000 Net income $1,470,000 $600,000 Other relevant information: (1) On December 1, 2011, Lewis entered into a tentative agreement to sell the assets of one its divisions. The division comprises operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the company. The sale is expected to be completed in early 2012. The book value of the division’s assets on December 31, 2011 is $5,200,000 and the estimated fair value (net of expected costs to sell) is $5,000,000. The division’s contribution to Lewis’ operating income
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HW#2 - Name:_ Accounting 350 Homework #2 Due on Thursday,...

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