The following are partial income statement account balances taken from the Decem
ID: 2703962 • Letter: T
Question
The following are partial income statement account balances taken from the December 31, 2013, year-end trial balance of White and Sons, Inc.: restructuring costs, $370,000; interest revenue, $47,000; loss from earthquake (unusual and infrequent), $470,000; and loss on sale of investments, $57,000. Income tax expense has not yet been accrued. The income tax rate is 40%.
Prepare the lower portion of the 2013 income statement beginning with $885,000 income before income taxes and extraordinary item. Include appropriate basic EPS disclosures. The company had 100,000 shares of common stock outstanding throughout the year. (Amounts to be deducted should be indicated with a minus sign. Round your "EPS" answers to 2 decimal places.)
The following are partial income statement account balances taken from the December 31, 2013, year-end trial balance of White and Sons, Inc.: restructuring costs, $370,000; interest revenue, $47,000; loss from earthquake (unusual and infrequent), $470,000; and loss on sale of investments, $57,000. Income tax expense has not yet been accrued. The income tax rate is 40%.
Explanation / Answer
WHITE AND SONS, INC.
Partial Income Statement
For the Year Ended December 31, 2013
Income before income taxes and extraordinary item $885,000
Income tax expense* 354,000
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Income before extraordinary item $531,000
Extraordinary item:
**Loss from earthquake, net of $188,000 tax benefit (282,000)
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Net income $ 249,000
Earnings per share:
Income before extraordinary item =531000/100000=$5.31
Loss from earthquake=282000/100000 = $(2.82)
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Net income $2.49
*$885,000*40% = $354,000
** Loss from Eartquake = 470,000, SO Tax benefit = 40%*470000 = $188,000
Note: Restructuring costs, interest revenue, and loss on sale of investments are included in income before income taxes and extraordinary item.
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