Question

The following information was taken from the records of Bridgeport Inc. for the year 2017: Income tax applicable to income from continuing operations $206,448; income tax applicable to loss on discontinued operations $27,336, and unrealized holding gain on available-for-sale securities (net of tax) $23,700.

Gain on sale of equipment		$97,700		Cash dividends declared		$139,500
Loss on discontinued operations		80,400		Retained earnings January 1, 2017		611,500
Administrative expenses		244,100		Cost of goods sold		933,800
Rent revenue		44,200		Selling expenses		277,800
Loss on write-down of inventory		60,600		Sales Revenue		1,981,600

Shares outstanding during 2017 were 109,300.

(a) Prepare a multiple-step income statement. (Round earnings per share to 2 decimal places, e.g. 1.48.)

Answer 1

a)
Bridgeport Inc.
Income Statement
For the Year Ended December 31, 2017
Sales Revenue	$1,981,600
Rent Revenue	$44,200
Total Revenue		$2,025,800
Less: Expenses:
Cost of Goods Sold	($933,800)
Selling Expenses	($277,800)
Administrative Expenses	($244,100)
Total Expenses		($1,455,700)
Income from continuing operations before income tax		$570,100
Less: Income Tax		($206,448)
Income from continuing operations		$363,652
Discontinued operations:
Loss on discontinued operations	($80,400)
Less: Applicable income tax reduction	$27,336	($53,064)
Income before extraordinary items		$310,588
Extraordinay Items:
Add: Extraordinary gain	$97,700
Less: Applicable Income tax ($206,448/$570,100*100 = 36.21%*$97,700)	($35,380)	$62,320
Income before extraordinary loss		$372,908
Less: Extraordinary loss	($60,600)
Less: Applicable income tax ($60,600*36.21/100)	$21,943	($38,657)
Net Income		$334,251
Earnings per share ($334,251/109,300 shares)		$3.06