Question

Rembrandt Paint Company had the following income statement items for the year ended December 31, 2018 ($ in 000s): Net sales $ 27,000 Cost of goods sold $ 15,000 Interest income 290 Selling and administrative expenses 3,400 Interest expense 530 Restructuring costs 1,700 In addition, during the year the company completed the disposal of its plastics business and incurred a loss from operations of $2.5 million and a gain on disposal of the component’s assets of $3.8 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. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in thousands except earnings per share. Round EPS answers to 2 decimal places.)

Answer 1

REMBRANDT PAINT COMPANY
Income Statement
For the Year Ended December 31, 2018
($ in thousands, except per share amounts)
Sales revenue		$27,000
Cost of goods sold		(15,000)
Gross profit		12,000
Operating expenses
Selling and administrative	($3,400)
Restructuring costs	(1,700)
		(5,100)
Operating income		6,900
Interest income (expense), net (530 - 290)		(240)
Income from continuing operations before income taxes		6,640
Income tax expense (40%)		(2,656)
Income from continuing operations		3,984
Discontinued operations
Income from operations of discontinued component	1,300
Income tax expense	(520)
Income on discontinued operations		780
Net income		4,764
Earnings per share
Income from continuing operations ($3,984,000 / 600,000)		6.64
Income on discontinued operations ($780,000 / 600,000)		1.30
Net income ($4,764,000 / 600,000)		7.94