In: Accounting
Selected information about income statement accounts for the
Rogers Company, Inc. is presented below (the company's fiscal year
ends on December 31):
2018 |
2017 |
|||
Sales |
$ |
4,400,000 |
$ |
3,500,000 |
Cost of goods sold |
2,860,000 |
2,000,000 |
||
Administrative expenses |
800,000 |
675,000 |
||
Selling expenses |
360,000 |
312,000 |
||
Interest revenue |
150,000 |
140,000 |
||
Interest expense |
200,000 |
200,000 |
||
Loss on sale of assets of discontinued component |
50,000 |
— |
||
On July 1, 2018, the company adopted a plan to discontinue a
division that qualifies as a component of an entity as defined by
GAAP. The assets of the component were sold on September 30, 2018,
for $50,000 less than their book value. Results of operations for
the component (included in the above account balances)
were as follows:
1/1/18-9/30/18 |
2017 |
||||||||
Sales |
$ |
400,000 |
$ |
500,000 |
|||||
Cost of goods sold |
(290,000 |
) |
(320,000 |
) |
|||||
Administrative expenses |
(50,000 |
) |
(40,000 |
) |
|||||
Selling expenses |
(20,000 |
) |
(30,000 |
) |
|||||
Operating income before taxes |
$ |
40,000 |
$ |
110,000 |
|||||
In addition to the account balances above, several events occurred
during 2018 that have not yet been reflected in the above
accounts:
Required:
Prepare a multiple-step income statement for the Rogers Company for
2018, showing 2017 information in comparative format, including
income taxes computed at 40% and EPS disclosures assuming 300,000
shares of common stock.
Rogers Company, Inc | ||
Comparative Income Statements | ||
For the Years Ended December 31 | ||
2018 | 2017 | |
Sales revenue | $ 4,000,000.00 | $ 3,000,000.00 |
Cost of goods sold | $ 2,570,000.00 | $ 1,680,000.00 |
Gross profit | $ 1,430,000.00 | $ 1,320,000.00 |
Operating expenses: | ||
Administrative | $ 750,000.00 | $ 635,000.00 |
Selling | $ 340,000.00 | $ 282,000.00 |
Loss from fire damage | $ 50,000.00 | |
Loss from write-down of obsolete inventory | $ 35,000.00 | |
Total operating expenses | $ 1,175,000.00 | $ 917,000.00 |
Operating income | $ 255,000.00 | $ 403,000.00 |
Other income and expenses: | ||
Interest revenue | $ 150,000.00 | $ 140,000.00 |
Interest expense | $ -200,000.00 | $ -200,000.00 |
Total other expenses (net) | $ -50,000.00 | $ -60,000.00 |
Income before income taxes - Continuing operations | $ 205,000.00 | $ 343,000.00 |
Income tax expense | $ 82,000.00 | $ 137,200.00 |
Income from continuing operations | $ 123,000.00 | $ 205,800.00 |
Discontinued operations: | ||
Income (loss) from operations of discontinued component ($50,000 - $40,000) | $ -10,000.00 | $ 110,000.00 |
Income tax benefit @ 40% (expense) | $ 4,000.00 | $ -44,000.00 |
Income (loss) on discontinued operations | $ -6,000.00 | $ 66,000.00 |
Net income | $ 117,000.00 | $ 271,800.00 |
Earnings per share: | ||
Income from continuing operations | $ 0.41 | $ 0.69 |
Discontinued operations | (6000/300000) | (66000/300,000) |
$ -0.02 | $ 0.22 | |
Net income | (117000/300,000) | (271800/300,000) |
$ 0.39 | $ 0.91 |