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Category > Accounting Posted 17 Aug 2017 My Price 15.00

Reed Company

Selected information about income statement accounts for the Reed Company is presented below (the company's fiscal year ends on December 31):

  2013 2012
  Sales $ 5,250,000   $ 4,350,000  
  Cost of goods sold   3,030,000     2,170,000  
  Administrative expenses   970,000     845,000  
  Selling expenses   530,000     482,000  
  Interest revenue   167,000     157,000  
  Interest expense   234,000     234,000  
  Loss on sale of assets of discontinued component   118,000     Ac€??  
 

On July 1, 2013, 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, 2013, for $118,000 less than their book value. Results of operations for the component (included in the above account balances) were as follows:
  1/1/13-9/30/13 2012
  Sales $ 570,000   $ 670,000  
  Cost of goods sold   (375,000 )   (422,000 )
  Administrative expenses   (67,000 )   (57,000 )
  Selling expenses   (37,000 )   (47,000 )
             
  Operating income before taxes $ 91,000   $ 144,000  
             
 

In addition to the account balances above, several events occurred during 2013 that have not yet been reflected in the above accounts:
1. A fire caused $67,000 in uninsured damages to the main office building. The fire was considered to be an infrequent but not unusual event.
2. An earthquake caused $117,000 in property damage to one of ReedAc€?cs factories. The amount of the loss is material and the event is considered unusual and infrequent.
3. Inventory that had cost $57,000 had become obsolete because a competitor introduced a better product. The inventory was sold as scrap for $8,000.
4. Income taxes have not yet been accrued.
Required:

Prepare a multiple-step income statement for the Reed Company for 2013, showing 2012 information in comparative format, including income taxes computed at 40% and EPS disclosures assuming 800,000 shares of common stock. (Amounts to be deducted should be indicated with a minus sign.Round EPS answers to 2 decimal places.)

Selected information about income statement accounts for the Reed Company is presented below (the company's fiscal year ends on December 31):
  2013 2012
  Sales $ 5,250,000   $ 4,350,000  
  Cost of goods sold   3,030,000     2,170,000  
  Administrative expenses   970,000     845,000  
  Selling expenses   530,000     482,000  
  Interest revenue   167,000     157,000  
  Interest expense   234,000     234,000  
  Loss on sale of assets of discontinued component   118,000     Ac€??  
 

On July 1, 2013, 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, 2013, for $118,000 less than their book value. Results of operations for the component (included in the above account balances) were as follows:
  1/1/13-9/30/13 2012
  Sales $ 570,000   $ 670,000  
  Cost of goods sold   (375,000 )   (422,000 )
  Administrative expenses   (67,000 )   (57,000 )
  Selling expenses   (37,000 )   (47,000 )
             
  Operating income before taxes $ 91,000   $ 144,000  
             
 

In addition to the account balances above, several events occurred during 2013 that have not yet been reflected in the above accounts:
1. A fire caused $67,000 in uninsured damages to the main office building. The fire was considered to be an infrequent but not unusual event.
2. An earthquake caused $117,000 in property damage to one of ReedAc€?cs factories. The amount of the loss is material and the event is considered unusual and infrequent.
3. Inventory that had cost $57,000 had become obsolete because a competitor introduced a better product. The inventory was sold as scrap for $8,000.
4. Income taxes have not yet been accrued.
Required:

Prepare a multiple-step income statement for the Reed Company for 2013, showing 2012 information in comparative format, including income taxes computed at 40% and EPS disclosures assuming 800,000 shares of common stock. (Amounts to be deducted should be indicated with a minus sign.Round EPS answers to 2 decimal places.)

Selected information about income statement accounts for the Reed Company is presented below (the company's fiscal year ends on December 31):
  2013 2012
  Sales $ 5,250,000   $ 4,350,000  
  Cost of goods sold   3,030,000     2,170,000  
  Administrative expenses   970,000     845,000  
  Selling expenses   530,000     482,000  
  Interest revenue   167,000     157,000  
  Interest expense   234,000     234,000  
  Loss on sale of assets of discontinued component   118,000     Ac€??  
 

On July 1, 2013, 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, 2013, for $118,000 less than their book value. Results of operations for the component (included in the above account balances) were as follows:
  1/1/13-9/30/13 2012
  Sales $ 570,000   $ 670,000  
  Cost of goods sold   (375,000 )   (422,000 )
  Administrative expenses   (67,000 )   (57,000 )
  Selling expenses   (37,000 )   (47,000 )
             
  Operating income before taxes $ 91,000   $ 144,000  
             
 

In addition to the account balances above, several events occurred during 2013 that have not yet been reflected in the above accounts:
1. A fire caused $67,000 in uninsured damages to the main office building. The fire was considered to be an infrequent but not unusual event.
2. An earthquake caused $117,000 in property damage to one of ReedAc€?cs factories. The amount of the loss is material and the event is considered unusual and infrequent.
3. Inventory that had cost $57,000 had become obsolete because a competitor introduced a better product. The inventory was sold as scrap for $8,000.
4. Income taxes have not yet been accrued.
Required:

Prepare a multiple-step income statement for the Reed Company for 2013, showing 2012 information in comparative format, including income taxes computed at 40% and EPS disclosures assuming 800,000 shares of common stock. (Amounts to be deducted should be indicated with a minus sign.Round EPS answers to 2 decimal places.)
 
     
 
 
REED COMPANY    
Comparative Income Statements    
For the Years Ended December 31    
  2013 2012
Sales revenue    
Cost of goods sold    
Gross profit (loss) 0 0
Operating expenses:    
Administrative    
Selling    
Loss from fire damage    
Loss from write-down of obsolete inventory    
Total operating expenses 0 0
Operating income 0 0
Other income (expense):    
Interest revenue    
Interest expense    
Total other expenses (net) 0 0
Income from continuing operations before income taxes and extraordinary item    
Income tax expense    
Income from continuing operations before extraordinary item 0 0
Discontinued operations gain (loss):    
Income (loss) from operations of discontinued component    
Income tax benefit (expense)    
Income (loss) on discontinued operations 0 0
Income before extraordinary item 0 0
Extraordinary gain (loss):    
Loss from earthquake    
Net income (loss) $0 $0
Earnings per share:    
Income from continuing operations before extraordinary item    
Discontinued operations    
Extraordinary loss    
Net income (loss)

 

Answers

Maurice Tutor
(5)
Status NEW Posted 17 Aug 2017 08:08 PM My Price 15.00

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