Mitchell Corporation's accounting records include the following items for the year ending December 31, 2017

Question

Gain on Sale of Equipment $12,000 Gain on Discontinued Operations $75,000
Loss on Disposal of Equipment 5,000 Extraordinary Loss 15,000
Net Sales 650,000 Cost of Goods Sold 285,000
Operating Expenses 120,000

The income tax rate for the company is 45%. The company had 15,000 shares of common stock outstanding during 2017 and no preferred stock. Prepare Mitchell's income statement for the year ending December 31, 2017. Show how Mitchell reports EPS data on its 2017 income statement.
What will be an ideal response

Answer 1

Mitchell Corporation
Income Statement
Year Ended December 31, 2017
Net Sales $650,000
Cost of Goods Sold 285,000
Gross Profit 365,000
Operating Expenses 120,000
Operating Income 245,000
Other Revenues and (Expenses):
Gain on Sale of Equipment 12,000
Loss on Disposal of Equipment (5,000 )
Income Before Income Taxes 252,000
Income Tax Expense ($252,000 x .45 ) 113,400
Income from Continuing Operations 138,600
Discontinued Operations Gain (less applicable tax
$75,000 x 45% = $33,750 ) 41,250
Income before Extraordinary Items 179,850
Extraordinary Loss (less applicable tax saving of
$15,000 x 45% = $6,750 ) (8,250 )
Net Income 171,600

Earnings per Share of Common Stock (15,000 shares outstanding)
Income from Continuing Operations 9.24
Gain from Discontinued Operations 2.75
Income before Extraordinary Items 11.99
Extraordinary Loss (0.55 )
Net Income $11.44