Question

Assume that income from continuing operations (net of tax) is $50,000, what is the amount of EPS reported for discontinued operations?

Using the information below, determine the number indicated above to be reported on the income statement, the statement of comprehensive income, or the retained earnings statement for the year ended Dec. 31, 2020

Assume a 30% tax rate on all items and that 100,000 shares of common stock were outstanding during the year.

All amounts except for the beginning retained earnings balance are pre-tax numbers.

Retained Earning                                $550,000

Net Sales                                    1,300,000

Selling expenses                                200,000

Earthquake loss on plant (unusual and infrequent)                280,000

Cash Dividends declared on common stock                    33,000

Cash Dividends declared on preferred stock                    12,000

Cost of goods sold                                780,000

Gain resulting from computation error on depreciation charge in 2015         510,000

Dividend revenue                                60,000

Administrative expenses                            40,000

Unrealize holding loss on available for sale securities                30,000

Gain on disposal of a component                        100,000

Answer 1

EPS from discontinued opeartions = 70000/100000 =0.7

Statement of Profir and Loss Account

For the year Ended 31st December 2019

Sales 1300000

Less: Cost of goods Sold 780000

Gross Profit 520000

Other Income 60000

Total Income 580000

Less: Selling Expenses 200000

Admin Expenses 40000

Net Profit before Exceptional and 340000

Extraordinary Items

+ Prior period item 5100000

- Earthquack loss 280000

Net Profit from before tax 570000

Less; Tax Provision 171000

Net Profit after Tax from countiuing 399000

Oprations

Gain From Discounting Operations 100000

Less: Tax Provisions 30000

Net Profit from discountiued

Opeartions 70000

Total Profit 469000

Statment of Other comprehensive Income

OCI which is not Classify to Pand L Account

Unrealised holding loss on available 30000

for sale securities

Total OCI 30000

Retained Earnings

Balance as Given 550000

Less:

Cash Dividend on Common Stock 33000

Cash Dividend on preferred stock 12000

Net Profit 469000

Closing Balance 974000

Accumulated Balace of OCI 30000

Total Retained Earning 1004000