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.

Answer 1

Multistep Income Statement
Particulars	$ in Millions
Sales Revenue	27
Cost of Goods Sold	15
Gross Profit	12
Operating Expenses:
Selling and Administrative	3.4
Restructing Costs	1.7
Operating Income	6.9
Interest Income (expense) net [(0.29-0.53)]	-0.24
Income from continuing operations before income taxes and extra ordinary items	6.66
Income Tax Expense (6.66*40%)	2.664
Income from continuing operations before extra ordinary items	3.996
Discontinued Operations:
Income from Discontinued Operations	-2.5
Income Tax Expense (2.5*40%)	-1
Income on discontinued Operations	-1.5
Income before extraordinary item
Extra ordinary Gain	3.8
Net Income	6.296
Earnings per share
Income from continuing operations before extraordinary item (6.66*1000000/600000)	6.66
Income from discontinued operations (-1.5*1000000/600000)	-2.5
Extraordinary gain (3.8*1000000/600000)	6.333333
Net income	10.49333