Selected information about income statement accounts for the Reed Company is presented below (the company?s fiscal year
Question:
Selected information about income statement accounts for the Reed Company is presented below (the company?s fiscal year ends on December 31).
On July 1, 2021, 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, 2021, for $48,000 less than their book value. Results of operations for the component (included in the above account balances) were as follows:
In addition to the account balances above, several events occurred during 2021 that have not yet been reflected in the above accounts:1. A fire caused $50,000 in uninsured damages to the main office building. The fire was considered to be an unusual event.2. Inventory that had cost $40,000 had become obsolete because a competitor introduced a better product. The inventory was written down to its scrap value of $5,000.3. Income taxes have not yet been recorded.
Required:Prepare a multiple-step income statement for the Reed Company for 2021, showing 2020 information in comparative format, including income taxes computed at 25% and EPS disclosures assuming 300,000 shares of outstanding common stock.
Step by Step Answer:
Intermediate Accounting
ISBN: 978-1260481952
10th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson, Wayne Thomas