Anoka Company reported the following selected items in the shareholders’ equity section of its balance sheet on December 31, 2019, and 2020:

In addition, it listed the following selected pretax items as of December 31, 2019 and 2020:

The preferred shares were outstanding during all of 2019 and 2020; annual dividends were declared and paid in each year. During 2019, 2,000 common shares were sold for cash on October 4. During 2020, a 20% stock
dividend was declared and issued in early May. At the end of 2019 and 2020, the common stock was selling for $25.75 and $32.20, respectively. The company is subject to a 30% income tax rate.

Required:
1. Prepare the comparative 2019 and 2020 income statements (multiple-step), and the related note that would appear in Anoka’s 2020 annual report.
2. Next Level Compute the price/earnings ratio for 2020. How does this compare to 2019? Why is it different?

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December 31, 2020 2019 Preferred stock, 7%, 100 par, nonconvertible Common stock, $10 par $50,000 84,000 $50,000 70,000 December 31, 2020 December 31, 2019 Debit Debit Credit Credit Sales Income from discontinued operations Cost of goods sold Operating expenses Loss from discontinued operations $140,000 $124,300 6,000 $80,000 20,000 9,000 $75,000 18,000