Question

Income statement and earnings per share

Shown below is information relating to operations of Laconia, Inc., for 2018:

Operating information:
Net sales	$7,620,000
Cost and expenses	$3,170,000
Income tax expense	$580,000
Other data:
Current-year profit generated by segment of the business discontinued in April (net of income taxes)	$420,000
Gain on disposal of discontinued segment (net of income taxes)	$108,000
Prior-period adjustment (decrease in prior years' income net of tax benefit)	$168,000
Non-recurring loss	$107,000
Income tax benefit on non-recurring loss	$11,000
Cash dividends declared ($1.50 per share)	$150,000

In the space provided, complete the income statement for Laconia, Inc., including earnings-per-share figures. Laconia has 100,000 shares of a single class of common stock outstanding throughout the year.

LACONIA, INC. Condensed Income Statement For the Year Ended December 31, 2018

rev: 11_21_2018_QC_CS-143121

Answer 1

	Income Statement for Laconia, Inc.
	Particulars	Amount $
	Net sales	7,620,000
	Less: Cost and expenses	3,170,000
	Less: Income Tax Expense	580,000
	Profit before exceptional items from continuing operations	3,870,000
	Less :Extraordinary loss (net of tax benefit)	96,000
	(107,000 - 11,000 )
	Profit for the year from continuing operations	3,774,000
	Discontinued operations:
	Add: Profit for the year from discontinued operations (net of income tax )	420,000
	Add: Gain on disposal of discontinued segment (net of income tax )	108,000
	Net Profit	4,302,000
	Earnings per share
	Earning per share for continuing operations	37.74	(3,774,000 / 100,000 )
	Earning per share for discontinuing operations	5.28	(420,000 + 108,000 ) / 100,000
	Earning per share for Net Profit	43.02	(4,302,000 / 100,000 )
	Note:
1	Prior period adjustment will be excluded because it will be adjusted in the opening retained earnings .
2	Cash dividend will be reduced from retained earnings in the statement of retained earnings .