The ledger of Port Hope Corporation at November 30, 2014, contains the following summary data:
Cash dividends-common...................................................... $65,000
Cash dividends-preferred..........................................25,000
Common shares......................................................325,000
Cost of goods sold................................................7,280,000
Depreciation expense................................................355,000
Net sales............................................................9,124,000
Operating expenses................................................1,120,000
Other comprehensive loss (before income tax)...................83,000
Other revenues.........................................................48,000
Preferred shares ($5 noncumulative)..............................400,000
Retained earnings, December 1, 2013............................755,000
Your analysis reveals the following additional information:
1. The company has a 25% income tax rate.
2. The communications devices division was discontinued on August 31. The profit from operations for the division up to that day was $20,000 before income tax. The division was sold at a loss of $75,000 before income tax.
3. There were 200,000 common and 5,000 preferred shares issued on December 1, 2013, with no changes during the year.
Instructions
(a) Prepare a multiple-step income statement for the year including EPS.
(b) Prepare a statement of comprehensive income as a separate statement.
Taking It Further
Why are gains and losses from discontinued operations reported separately from continuing operations?