Question

Presented below is information related to Armaco Company. Retained earnings, December 31, 2017 $ 650,000 Sales revenue 1,600,000 Selling and administrative expenses 290,000 Discontinued operations loss (pre-tax) 290,000 Cash dividends declared on common stock 33,600 Cost of goods sold 880,000 Gain resulting from computation error on depreciation charge in 2016 (pre-tax) 520,000 Other revenue 120,000 Other expenses 100,000 Instructions Prepare in good form a multiple-step income statement for the year 2018. Assume a 30% tax rate and that 80,000 shares of common stock were outstanding during the year.

Answer 1

Armaco Company
Income Statement
For the Year Ended December 31, 2018
Sales Revenue		1,600,000
Cost of goods sold		880,000
Gross Profit / (Loss)		720,000
Selling and Administrative Expense		290,000
Income From Operations		430,000
Other Revenues and Expenses
Other Revenue	120,000
Other Expenses	(100,000)	20,000
Income from Continuing Operations Before Income Tax		450,000
Income Tax Expense		135,000
Income from Continuing Operations		295,000
Discontinued Operations
Loss on discontinued operations (net of tax)		203,000
Net Income		92,000
Earnings per share
Income from continuing operations		3.69
Discontinued operations		(2.54)
Net Income/(Loss)		1.15