lue Corp. has 150,950 shares of common stock outstanding. In 2020, the company reports income from...

lue Corp. has 150,950 shares of common stock outstanding. In 2020, the company reports income from continuing operations before income tax of $1,228,700. Additional transactions not considered in the $1,228,700 are as follows.

1.		In 2020, Blue Corp. sold equipment for $40,000. The machine had originally cost $84,400 and had accumulated depreciation of $33,400. 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 $196,700 before taxes. Assume that this transaction meets the criteria for discontinued operations. The loss from operations of the discontinued subsidiary was $93,300 before taxes; the loss from disposal of the subsidiary was $103,400 before taxes.
3.		An internal audit discovered that amortization of intangible assets was understated by $38,200 (net of tax) in a prior period. The amount was charged against retained earnings.
4.		The company recorded a non-recurring gain of $125,000 on the condemnation of some of its property (included in the $1,228,700).

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.)

BLUE CORP. Income Statement (Partial) December 31, 2020For the Year Ended December 31, 2020For the Quarter Ended December 31, 2020
Income TaxDiscontinued OperationsDividendsEarnings Per ShareExpensesGain on CondemnationIncome From Continuing OperationsIncome From Continuing Operations Before Income TaxNet Income / (Loss)Retained Earnings, January 1Retained Earnings, December 31RevenuesLoss from Disposal of SubsidiaryLoss from Operations of Discontinued Subsidiary			$
Income TaxDiscontinued OperationsDividendsEarnings Per ShareExpensesGain on CondemnationIncome From Continuing OperationsIncome From Continuing Operations Before Income TaxNet Income / (Loss)Retained Earnings, January 1Retained Earnings, December 31RevenuesLoss from Disposal of SubsidiaryLoss from Operations of Discontinued Subsidiary
Income TaxDiscontinued OperationsDividendsEarnings Per ShareExpensesGain on CondemnationIncome From Continuing OperationsIncome From Continuing Operations Before Income TaxNet Income / (Loss)Retained Earnings, January 1Retained Earnings, December 31RevenuesLoss from Disposal of SubsidiaryLoss from Operations of Discontinued Subsidiary
Income TaxDiscontinued OperationsDividendsEarnings Per ShareExpensesGain on CondemnationIncome From Continuing OperationsIncome From Continuing Operations Before Income TaxNet Income / (Loss)Retained Earnings, January 1Retained Earnings, December 31RevenuesLoss from Disposal of SubsidiaryLoss from Operations of Discontinued Subsidiary
Income Tax Discontinued Operations Dividends Earnings Per Share Expenses Gain on Condemnation Income From Continuing Operations Income From Continuing Operations Before Income Tax Net Income / (Loss) Retained Earnings, January 1 Retained Earnings, December 31 Revenues Loss from Disposal of Subsidiary Loss from Operations of Discontinued Subsidiary	$
Add Less : Applicable Income Tax ReductionDiscontinued OperationsDividendsEarnings Per ShareExpensesGain on CondemnationIncome From Continuing OperationsIncome From Continuing Operations Before Income TaxNet Income / (Loss)Retained Earnings, January 1Retained Earnings, December 31RevenuesLoss from Disposal of SubsidiaryLoss from Operations of Discontinued Subsidiary		$
Income Tax Discontinued Operations Dividends Earnings Per Share Expenses Gain on Condemnation Income From Continuing Operations Income From Continuing Operations Before Income Tax Net Income / (Loss) Retained Earnings, January 1 Retained Earnings, December 31 Revenues Loss from Disposal of Subsidiary Loss from Operations of Discontinued Subsidiary
Add Less : Applicable Income Tax ReductionDiscontinued OperationsDividendsEarnings Per ShareExpensesGain on CondemnationIncome From Continuing OperationsIncome From Continuing Operations Before Income TaxNet Income / (Loss)Retained Earnings, January 1Retained Earnings, December 31RevenuesLoss from Disposal of SubsidiaryLoss from Operations of Discontinued Subsidiary

Income TaxDiscontinued OperationsDividendsEarnings Per ShareExpensesGain on CondemnationIncome From Continuing OperationsIncome From Continuing Operations Before Income TaxNet Income / (Loss)Retained Earnings, January 1Retained Earnings, December 31RevenuesLoss from Disposal of SubsidiaryLoss from Operations of Discontinued Subsidiary			$
Income TaxDiscontinued Operations, Net of TaxDividendsEarnings Per ShareExpensesGain on CondemnationIncome From Continuing OperationsIncome From Continuing Operations Before Income TaxNet Income / (Loss)Retained Earnings, January 1Retained Earnings, December 31RevenuesLoss from Disposal of SubsidiaryLoss from Operations of Discontinued Subsidiary :
Income Tax Discontinued Operations, Net of Tax Dividends Earnings Per Share Expenses Gain on Condemnation Income From Continuing Operations Income From Continuing Operations Before Income Tax Net Income / (Loss) Retained Earnings, January 1 Retained Earnings, December 31 Revenues Loss from Disposal of Subsidiary Loss from Operations of Discontinued Subsidiary			$
Income Tax Discontinued Operations, Net of Tax Dividends Earnings Per Share Expenses Gain on Condemnation Income From Continuing Operations Income From Continuing Operations Before Income Tax Net Income / (Loss) Retained Earnings, January 1 Retained Earnings, December 31 Revenues Loss from Disposal of Subsidiary Loss from Operations of Discontinued Subsidiary
Income Tax Discontinued Operations, Net of Tax Dividends Earnings Per Share Expenses Gain on Condemnation Income From Continuing Operations Income From Continuing Operations Before Income Tax Net Income / (Loss) Retained Earnings, January 1 Retained Earnings, December 31 Revenues Loss from Disposal of Subsidiary Loss from Operations of Discontinued Subsidiary			$

Expert Solution


Blue Corp.
Income Statement (in part)
For the Year Ended December 31, 2020
	$
Income from continuing operation before taxes	11,03,700	=1228700-125000	1103700
Amortization ( as debit to retained earning -Gross amount )	-47,160	=38200/81*100	-47160
Non recurring gain on property	1,25,000
Loss on sale of equipment	-11,000	=40000-(84400-33400)	-11000
Income from continuing operation and non recurring item	11,70,540
taxes	2,22,403
Income from continuing operation after tax	9,48,137

Discontinued Operating gain or (loss)
Loss from discontinuing operation before taxes of subsidiary	-93,300
Loss from disposal of subsudiary	-1,03,400
taxes	-
Income from discontinuing operation	-1,96,700
Total Income from continue and discontinue	7,51,437
EPS (Total Earning /No. of shares)	4.98

Notes: It is assumed no tax for discountinue operation.

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