Selected information about income statement accounts for the Reed Company is presented below (the company's fiscal year ends on December 31): Sales revenue Cost of goods sold Administrative expense Selling expense Interest revenue Interest expense Loss on sale of assets of discontinued component Sales revenue Cost of goods sold Administrative expense Selling expense Operating income before taxes On July 1, 2021, the company adopted a plan to discontinue a division that qualifies as a component of an entity as defined GAAP. The assets of the component were sold on September 30, 2021, for $120,000 less than their book value. Results of operations for the component (included in the above account balances) were as follows: 1/1/2021-9/30/2021 $ 580,000 2021 2020 $5,300,000 $4,400,000 3,040,000 2,180,000 980,000 855,000 540,000 482,000 168,000 (380,000) (68,000) (38,000) $ 94,000 236,000 120,000 2020 $ 680,000 (428,000) (58,000) (38,000) 158,000 236,000 $ 156,000 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 $68,000 in uninsured damages to the main office building. The fire was considered to be an unusual event. 2. Inventory that had cost $58,000 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 600,000 shares of outstanding common stock. (Amounts to be deducted should be indicated with a minus sign. Round EPS answers to 2 decimal places.)

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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Selected information about income statement accounts for the Reed Company is presented below (the company's fiscal year ends on
December 31):
Sales revenue
Cost of goods sold
Administrative expense
Selling expense
Interest revenue
Interest expense
Loss on sale of assets of discontinued component
On July 1, 2021, the company adopted a plan to discontinue 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 $120,000 less than their book value. Results of operations for the
component (included in the above account balances) were as follows:
Sales revenue
Cost of goods sold
Administrative expense
Selling expense
Operating income before taxes
1/1/2021-9/30/2021
580,000
(380,000)
(68,000)
(38,000)
$ 94,000
2021
2020
$5,300,000 $4,400,000
3,040,000 2,180,000
980,000 855,000
540,000
482,000
168,000
158,000
236,000
236,000
120,000
In addition to the account balances above, several events occurred during 2021 that have not yet been reflected in the above
accounts:
2020
$ 680,000
(428,000)
(58,000)
(38,000)
$ 156,000
1. A fire caused $68,000 in uninsured damages to the main office building. The fire was considered to be an unusual event.
2. Inventory that had cost $58,000 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.
REED COMPANY
Comparative Income Statements
For the Years Ended December 31
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 600,000 shares of outstanding common stock. (Amounts to be
deducted should be indicated with a minus sign. Round EPS answers to 2 decimal places.)
2021
2020
Transcribed Image Text:Selected information about income statement accounts for the Reed Company is presented below (the company's fiscal year ends on December 31): Sales revenue Cost of goods sold Administrative expense Selling expense Interest revenue Interest expense Loss on sale of assets of discontinued component On July 1, 2021, the company adopted a plan to discontinue 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 $120,000 less than their book value. Results of operations for the component (included in the above account balances) were as follows: Sales revenue Cost of goods sold Administrative expense Selling expense Operating income before taxes 1/1/2021-9/30/2021 580,000 (380,000) (68,000) (38,000) $ 94,000 2021 2020 $5,300,000 $4,400,000 3,040,000 2,180,000 980,000 855,000 540,000 482,000 168,000 158,000 236,000 236,000 120,000 In addition to the account balances above, several events occurred during 2021 that have not yet been reflected in the above accounts: 2020 $ 680,000 (428,000) (58,000) (38,000) $ 156,000 1. A fire caused $68,000 in uninsured damages to the main office building. The fire was considered to be an unusual event. 2. Inventory that had cost $58,000 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. REED COMPANY Comparative Income Statements For the Years Ended December 31 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 600,000 shares of outstanding common stock. (Amounts to be deducted should be indicated with a minus sign. Round EPS answers to 2 decimal places.) 2021 2020
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 600,000 shares of outstanding common stock. (Amounts to be
deducted should be indicated with a minus sign. Round EPS answers to 2 decimal places.)
Gross profit (loss)
Operating expenses:
Total operating expenses
Operating income
Other income (expense):
REED COMPANY
Comparative Income Statements
For the Years Ended December 31
Total other income, net
Income from continuing operations before income taxes
Income from continuing operations
Discontinued operations:
Income (loss) on discontinued operations
Net income
Earnings per share:
Net income
$
2021
0
0
0
2020
0
0
0
0
0
0
Transcribed Image Text: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 600,000 shares of outstanding common stock. (Amounts to be deducted should be indicated with a minus sign. Round EPS answers to 2 decimal places.) Gross profit (loss) Operating expenses: Total operating expenses Operating income Other income (expense): REED COMPANY Comparative Income Statements For the Years Ended December 31 Total other income, net Income from continuing operations before income taxes Income from continuing operations Discontinued operations: Income (loss) on discontinued operations Net income Earnings per share: Net income $ 2021 0 0 0 2020 0 0 0 0 0 0
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