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ACC - Reed Company

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Question

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 $ 4,950,000 $ 4,050,000;Cost of goods sold 2,970,000 2,110,000;Administrative expenses 910,000 785,000;Selling expenses 470,000 422,000;Interest revenue 161,000 151,000;Interest expense 222,000 222,000;Loss on sale of assets of discontinued component 94,000 ?;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 $94,000 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 $ 510,000 $ 610,000;Cost of goods sold (345,000) (386,000);Administrative expenses (61,000) (51,000);Selling expenses (31,000) (41,000);Operating income before taxes $ 73,000 $ 132,000;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 $61,000 in uninsured damages to the main office building. The fire was considered to be an infrequent but not unusual event.;2. An earthquake caused $111,000 in property damage to one of Reed?s factories. The amount of the loss is material and the event is considered unusual and infrequent.;3. Inventory that had cost $51,000 had become obsolete because a competitor introduced a better product. The inventory was sold as scrap for $5,000.;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 400,000 shares of common stock. (Amounts to be deducted should be indicated with a minus sign.Round EPS answers to 2 decimal places.)

 

Paper#80706 | Written in 18-Jul-2015

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