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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Pallest Corporation reported the following pretax information for its current fiscal year: $40,000 income from continuing operations and an $8,000 loss arising from discontinuing a segment (it was simply closed, no gain or loss on sale). Pallest is subject to a 30% income tax rate and had 8,000 shares of common stock outstanding for the year. Starting with pretax income from continuing operations, prepare a partial income statement for Pallest for the current year. Be sure to include earnings per share information.

To determine

Prepare a partial income statement of Company P for the year ended December 31.

Explanation

Income statement: The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.

Prepare a partial income statement of Company P for the current year as follows:

Company O
Income Statement (Partial)
For Year Ended December 31, Current Year
ParticularsAmounts ($)
Pretax income from continuing operations$40,000
Less: Income tax expense (1)12,000
Income from continuing operations (a)$28,000
Less: Loss from discontinued operations (2) (c)5,600
Net Income$22,400
Number of common shares (b)8,000 shares
Earnings per share for income from continuing operations (a÷b)$3.50
Less: Earnings per share for loss from discontinued operations (c÷b) $(0

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