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28 Sep 2019
Wade Corp. has 150,000 shares of common stock outstanding. In2017, the company reports income from continuing operations beforeincome tax of $1,210,000. Additional transactions not considered inthe $1,210,000 are as follows.
1. In 2017, Wade Corp. sold equipment for $40,000. The machine hadoriginally cost $80,000 and had accumulated depreciation of$30,000. The gain or loss is considered non-recurring. 2. The company discontinued operations of one of its subsidiariesduring the current year at a loss of $190,000 before taxes. Assumethat this transaction meets the criteria for discontinuedoperations. The loss from operations of the discontinued subsidiarywas $90,000 before taxes; the loss from disposal of the subsidiarywas $100,000 before taxes. 3. An internal audit discovered that amortization of intangibleassets was understated by $35,000 (net of tax) in a prior period.The amount was charged against retained earnings. 4. The company had a non-recurring gain of $125,000 on thecondemnation of some of its property (included in the$1,210,000).
Analyze the above information and prepare an income statement forthe year 2017, starting with income from continuing operationsbefore income tax. Compute earnings per share as it should be shownon the face of the income statement. (Assume a total effective taxrate of 38% on all items, unless otherwise indicated.)(Round earnings per share to 2 decimal places, e.g.1.47.)
Wade Corp. has 150,000 shares of common stock outstanding. In2017, the company reports income from continuing operations beforeincome tax of $1,210,000. Additional transactions not considered inthe $1,210,000 are as follows.
1. | In 2017, Wade Corp. sold equipment for $40,000. The machine hadoriginally cost $80,000 and had accumulated depreciation of$30,000. The gain or loss is considered non-recurring. | |
2. | The company discontinued operations of one of its subsidiariesduring the current year at a loss of $190,000 before taxes. Assumethat this transaction meets the criteria for discontinuedoperations. The loss from operations of the discontinued subsidiarywas $90,000 before taxes; the loss from disposal of the subsidiarywas $100,000 before taxes. | |
3. | An internal audit discovered that amortization of intangibleassets was understated by $35,000 (net of tax) in a prior period.The amount was charged against retained earnings. | |
4. | The company had a non-recurring gain of $125,000 on thecondemnation of some of its property (included in the$1,210,000). |
Analyze the above information and prepare an income statement forthe year 2017, starting with income from continuing operationsbefore income tax. Compute earnings per share as it should be shownon the face of the income statement. (Assume a total effective taxrate of 38% on all items, unless otherwise indicated.)(Round earnings per share to 2 decimal places, e.g.1.47.)
Sixta KovacekLv2
28 Sep 2019