The following balances appeared in the general ledger for Hacky Sak Corporation at fiscal year end September

Question:

The following balances appeared in the general ledger for Hacky Sak Corporation at fiscal year end September 30, 2011:

Selling and administrative expenses .........$ 15,000

Other revenues and gains.............. 40,000

Operating expenses 65,000 Cost of goods sold ......125,000

Net sales.................... 385,000

Other expenses and losses............. 25,000

In addition, the following occurred during the year:

a. On April 10, a tornado destroyed one of the company’s manufacturing plants, resulting in an extraordinary loss of $ 55,000.

b. On July 31, the company discontinued one of its unprofitable segments. The loss from operations was $ 25,000. The assets of the segment were sold at a gain of $ 15,000.

Requirements

1. Assume Hacky Sak’s income tax rate is 35%; prepare the income statement for the year ended September 30, 2011.

2. Calculate the earnings per share the company would report on the income statement assuming Hacky Sak had a weighted average of 200,000 shares of common stock outstanding during the year and paid no preferred dividends.

Common Stock
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