The audit senior has asked you to review the income statement. The audit senior noticed that the EPS information was left out of the financial statements. He wants you to calculate both the basic and diluted EPS (for dilutive EPS, use the convertible securities)

Compute the company's basic and diluted EPS. Update the log of issues to include this week's topics. Prepare a report for the audit senior, summarizing all of the issues from this week.

Transcribed Image Text:

Income Statement of Ross Enterprises for the Year Ended 2008 $20,000,000 Net revenues Cost of goods sold $11,200,000 Gross profit $8,800,000 Selling and administrative expenses $4,320,000 Income from operations $4,480,000 Other revenues and gains $500,000 Interest revenues Other expenses and losses - $50,000 $450,000 Loss on disposal of old equipment Income from continuing operations before $4,930,000 income tax Income tax (at the rate of 40%) $1,972,000 Income from continuing operations $2,958,000 Discontinued operations Income from operations of Bacon $54,000 division, net of Applicable income tax of $36,000 Loss on disposal of Bacon division, less - S1,05,000 -$51,000 Applicable income tax of $70,000 Income before extraordinary item $2,907,000 Extraordinary item – Loss from tomado, less - $222,000 Applicable income tax of $148,000 Net Income $2,685,000