Question Cook Co. had the following nominal account items for the year ended 201

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Question

Cook Co. had the following nominal account items for the year ended 2016:

Net Sales

980,000

R&D Expense

30,000

SG&A Expense

240,000

Unrealized Gain on Trading Securities

2,500

Unrealized Loss on AFS Securities

61,000

Labor Strike Loss

10,900

COGS

215,600

Gain on Land Sale

33,000

Foreigh Currency Translation Gain

42,000

Preferred Stock Dividends

55,000

Dividend Revenue

7,800

Common Stock Dividends

15,000

In 2016, Cook Co. discontinued its Book division. The Book division had a pretax operating income of $170,000 and a loss on the disposal of $58,000.   Income tax expense for the year has yet to be accrued. Cook’s income tax rate is 25% on all items.

Information about common shares:

Classification                      Jan 1                      Dec 31

Authorized                         200,000 200,000

Issued 90,000                 140,000

Outstanding 75,000                 125,000

Question 1          Determine Cook’s Income from Operations.

Question 2          Determine Cook’s Income from Continuing Operations before Tax.

Question 3          Determine Cook’s Net Income.

Question 4          Determine Cook’s Comprehensive Income.

Question 5          Determine Cook’s EPS for the following:

EPS - Income from Continuing Operations

                                                EPS - Discontinued Operations

                                                EPS - Net Income

Net Sales

980,000

R&D Expense

30,000

SG&A Expense

240,000

Unrealized Gain on Trading Securities

2,500

Unrealized Loss on AFS Securities

61,000

Labor Strike Loss

10,900

COGS

215,600

Gain on Land Sale

33,000

Foreigh Currency Translation Gain

42,000

Preferred Stock Dividends

55,000

Dividend Revenue

7,800

Common Stock Dividends

15,000

Explanation / Answer

Less: Net operating income from Discontinued business:

Question 5: EPS - Income from continuing business: 303375 / 125000 = $2.43 per share

EPS - Income from continuing business: 84000 / 125000 = $0.67 per share

EPS - Net Income :$477225 / 125000 = $3.82 per share

Question No. Net Sales $980000 Gain on Land Sale 33000 Total Revenue 1013000 Less: COGS 215600 Gross Income 797400 Less: R & D Expenses 30000 S,G&A Expenses 240000 Labor Strick loss 10900 1 Income from Operations 516500

Less: Net operating income from Discontinued business:

Operating Income from discontinued business 170000 Less: loss on the disposal of business 58,000 112000 2 Operating income from continuing business 404500 Less: Income tax 101125 Net income from continuing business (A) 303375 Operating Income from discontinued business (net of disposal loss) 112000 Less: Income Tax 28000 Net Operating Income from discontinued business (B0 84000 Other comprehensive incomes: Foreigh Currency Translation Gain 42000 Preferred Stock Dividends 55000 Dividend Revenue 7800 Common Stock Dividends 15000 Total comprehensive income before tax 119800 Less: Income Tax 29950 4 comprehensive income net of tax (C) 89850 3 Cook's Net income $477225

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