I have attached two files with one question each I need help to answer. Thanks

I have attached two files with one question each I need help to answer. Thanks

Attachment 1

Attachment 2

ATTACHMENT PREVIEW

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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):
2013
2012
Sales
$
4,450,000
$
3,550,000
Cost of
goods sold
2,870,000
2,010,000
Administrat
ive expenses
810,000
685,000
Selling
expenses
370,000
322,000
Interest
revenue
151,000
141,000
Interest
expense
202,000
202,000
Loss on
sale of assets
of
discontinued
component
54,000

On July 1, 2013, the company adopted a plan to discontinue a division that qualifies as a component of an
entity as defined by GAAP. The assets of the component were sold on September 30, 2013, for $54,000 less than
their book value. Results of operations for the component (
included
in the above account balances) were as follows:
1/1/13-
9/30/13
2012
Sales
$
410,000
$
510,000
Cost of
goods sold
(295,000)
(326,000)
Administr
ative
expenses
(51,000)
(41,000)
Selling
expenses
(21,000)
(31,000)
Operating
income
before
taxes
$
43,000
$
112,000
In addition to the account balances above, several events occurred during 2013 that have
not
yet been reflected
in the above accounts:
1.
A fire caused $51,000 in uninsured damages to the main office building. The fire was considered to be an
infrequent but not unusual event.
2.
An earthquake caused $101,000 in property damage to one of Reed’s factories. The amount of the loss is
material and the event is considered unusual and infrequent.
3.
Inventory that had cost $41,000 had become obsolete because a competitor introduced a better product. The
inventory was sold as scrap for $5,000.
4.
Income taxes have not yet been accrued.

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Required:
Prepare a multiple-step income statement for the Reed Company for 2013, showing 2012 information in
comparative format, including income taxes computed at 40% and EPS disclosures assuming 400,000 shares of
common stock.
(Amounts to be deducted should be indicated with a minus sign.Round EPS answers to 2
decimal places.)
Sales revenue
Cost of goods
gross profit(loss)
operating expenses
Admin
Selling
Loss from fire damage
Loss from write-down of obsulute inventory
Total operating exps
Operating income
Other incone(expenses)
Interest revenue
Interest expenses
Total other expense (net)
Income from continuing operations before income tax and extraordinaryitem
Income tax benefit expense
Income from continuing operations before extraordinary
item
Discontinued operation gain (loss)
Income (loss)
from operations
of discontinued component
Income tax benefit(exps)
Income (loss) on discontinued operations
Income before extraordinary item
Extraordinary gain (loss)
Loss from earthquake
Net income(Loss)
Earnings per share
Income from continuing operations before extraordinary
item
discontinued operations
extraordinary loss
Net income (Loss)

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The income statement and a schedule reconciling cash flows from operating activities to net income are provided
below ($ in millions) for Mike Roe Computers.
MIKE ROE COMPUTERS
Income Statement
For the Year Ended December 31, 2013
Sales
$
1
4
8
.
6
0
Cost of
goods sold
(
8
9
.
3
0
)
Gross
margin
5
9
.
3
0
Salaries
expense
$
18.60
Insurance
expense
10.60
Depreciatio
n expense
4.30
Interest
expense
5.30
(
3
8
.
8
0
)
Gains and
losses:
Gain on
sale of
equipment
1
0
.
6
0

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Loss on
sale of land
(
1
.
6
0
)
Income
before tax
2
9
.
5
0
Income
tax expense
(
1
4
.
7
5
)
Net income
$
1
4
.
7
5
Reconciliation of Net Income
to Net Cash Flows
from Operating Activities
Net income
$
14.75
Adjustments for noncash
effects:
Decrease in accounts
receivable
4.30
Gain on sale of equipment
(10.60)
Increase in inventory
(5.30)
Increase in accounts payable
8.30
Increase in salaries payable
2.30
Depreciation expense
4.30
Decrease in bond discount
2.65
Decrease in prepaid insurance
1.30
Loss on sale of land
1.60
Increase in income tax
payable
5.30

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