Question

Rembrandt Paint Company had the following income statement items for the year ended December 31, 2018 ($ in 000s):

Net sales	$	33,000	Cost of goods sold	$	18,000
Interest income		350	Selling and administrative expenses		4,000
Interest expense		650	Restructuring costs		2,300

In addition, during the year the company completed the disposal of its plastics business and incurred a loss from operations of $3.1 million and a gain on disposal of the component’s assets of $5.0 million. 600,000 shares of common stock were outstanding throughout 2018. Income tax expense has not yet been recorded. The income tax rate is 40% on all items of income (loss).

Required:
Prepare a multiple-step income statement for 2018, including EPS disclosures.

Answer 1

			Income statement
							$ in '000	$ in '000
	Sales revenue							33000
	Less: Cost of goods sold							18000
	Gross profit							15000
	Less: Operating expenses
	Selling and administrative						4000
	Restructuring costs						2300	6300
	Operating income							8700
	Interest income (expense),net			(650-350)				-300
	Income from continuing operations before income taxes							8400
	Income tax expense			(8400*0.40)				3360
	Income from continuing operations							5040
	Discontinued operations
	Income from operations of discontinued business					(5000-3100)	1900
	(5 million-3.1 million)
	Tax expense				(1900*0.40)		760
	Income on discontinued operations							1140
	Net income							6180
	Earnings per share:
	Income from continuing operations				(5040/600)			8.4
	Income on discontinued operations				(1140/600)			1.9
	Net income				(6180/600)			10.3
	Note: Number of shares outstanding=600000 shares
	But, for the purpose of computation of EPS,Change it into '000s.
	So, Number of shares will be 600