During the current year, Sports +, Inc., operated two business segments: a chain of surf and dive shops and a small chain of tennis shops. The tennis shops were not profitable and were sold near year-end to another corporation. Sports + operations for the current year are summarized below.

The first two captions, “Net sales” and “Costs and expenses,” relate only to the company’s continuing operations.

Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $12,500,000

Costs and expenses (including applicable income tax) . . . . . . . . . . . . . . . . . . . 8,600,000

Operating loss from tennis shops (net of income tax benefit) . . . . . . . . . . . . . . 192,000

Loss on sale of tennis shops (net of income tax benefit) . . . . . . . . . . . . . . . . . . 348,000

The company had 182,000 shares of a single class of capital stock outstanding throughout the year.

a. Prepare a condensed income statement for the year. At the bottom of the statement, show any appropriate earnings per share figures. (A condensed income statement is illustrated in Exhibit 12–2.)

b. Which earnings per share figure in part a do you consider most useful in predicting future operating results for Sports +, Inc.?Why?

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Exhibit 12-2 EARNINGS PER SHARE PRESENTATION PERRY CORPORATION CONDENSED INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2011 Net sales.. Costs and expenses (including tax on $9,115,000 continuing operations) Income from continuing operations Loss from discontinued operations (net of 8,310,000 $ 805,000 income tax benefits) Income before extraordinary items Extraordinary loss (net of income tax benefit) Net income Earnings per share of common stock: (90,000) S 715,000 $ (120,000) $ 595,000 Earnings from continuing operations $3,678 Loss from discontinued operations (0.45) Earnings before extraordinary items Extraordinary loss Net eanings $3.22b (0.60) $2.62 "($805,000-$72,000 preferred dividends) ÷ 200,000 shares ($715,000 $72,000) 200,000 shares "($595,000-$72,000) ÷ 200,000 shares