Rembrandt Paint Company had the following income statement items for the year en

Question

Rembrandt Paint Company had the following income statement items for the year ended December 31, 2018 ($ in 000s):

In addition, during the year the company completed the disposal of its plastics business and incurred a loss from operations of $3.1 million and a gain on disposal of the component’s assets of $5.0 million. 600,000 shares of common stock were outstanding throughout 2018. Income tax expense has not yet been recorded. The income tax rate is 40% on all items of income (loss).

Required:
Prepare a multiple-step income statement for 2018, including EPS disclosures.

Net sales $ 33,000    Cost of goods sold $ 18,000 Interest income 350 Selling and administrative expenses 4,000 Interest expense 650 Restructuring costs 2,300

Explanation / Answer

Income statement $ in '000 $ in '000 Sales revenue 33000 Less: Cost of goods sold 18000 Gross profit 15000 Less: Operating expenses Selling and administrative 4000 Restructuring costs 2300 6300 Operating income 8700 Interest income (expense),net (650-350) -300 Income from continuing operations before income taxes 8400 Income tax expense (8400*0.40) 3360 Income from continuing operations 5040 Discontinued operations Income from operations of discontinued business (5000-3100) 1900 (5 million-3.1 million) Tax expense (1900*0.40) 760 Income on discontinued operations 1140 Net income 6180 Earnings per share: Income from continuing operations (5040/600) 8.4 Income on discontinued operations (1140/600) 1.9 Net income (6180/600) 10.3 Note: Number of shares outstanding=600000 shares But, for the purpose of computation of EPS,Change it into '000s. So, Number of shares will be 600

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