Selected information about income statement accounts for

Selected information about income statement accounts for the Reed Company is presented below (the company's fiscal year ends on December 31):

20132012
Sales$5,100,000$4,200,000
Cost of goods sold3,000,0002,140,000
Administrative expenses940,000815,000
Selling expenses500,000452,000
Interest revenue164,000154,000
Interest expense228,000228,000
Loss on sale of assets of discontinued component106,000

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 $106,000 less than their book value. Results of operations for the component (included in the above account balances) were as follows:

1/1/13-9/30/132012
Sales$540,000$640,000
Cost of goods sold(360,000)(404,000)
Administrative expenses(64,000)(54,000)
Selling expenses(34,000)(44,000)
Operating income before taxes$82,000$138,000

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 $64,000 in uninsured damages to the main office building. The fire was considered to be an infrequent but not unusual event.
2.An earthquake caused $114,000 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 $54,000 had become obsolete because a competitor introduced a better product. The inventory was sold as scr ap 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 a comparative format, including income taxes computed at 40% and EPS disclosures assuming 800,000 shares of common stock. (Amounts to be deducted should be indicated with a minus sign. Round EPS answers to 2 decimal places.)


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