Income Statement and Earnings per Share for Extraordinary Items and Discontinued

Question

Income Statement and Earnings per Share for Extraordinary Items and Discontinued Operations

Brady, Inc., reports the following for 2014:

*Net of any tax effect.

a. Prepare a partial income statement for Brady, Inc., beginning with income from continuing operations before income tax.

Brady, Inc.

Partial Income Statement

For the Year Ended December 31, 2014

$

$

$

Extraordinary item:

$

b. Calculate the earnings per common share for Brady, Inc., including per-share amounts for unusual items. Enter answers in dollars and cents, rounding to the nearest whole cent.

Brady, Inc.

Partial Income Statement

For the Year Ended December 31, 2014

Earnings per common share:

$

$

Extraordinary item:

$

Income from continuing operations before income tax $396,000 Extraordinary property loss from hurricane $47,250 * Loss from discontinued operations $71,550 * Weighted average number of shares outstanding 27,000 Applicable tax rate 40 %

Explanation / Answer

Income Statement : Particulars Amount $ Income from continuing operations before income tax       396,000 Less: Extraordinary property loss from hurricane        (47,250) Income from Continuing Operatons Before Tax       348,750 Less: Loss from discontinued operations        (71,550) Income Before Tax After Set off Loss from Discontinued Operations       277,200 Income Tax @ 40%      (110,880) Net Income for Share Holders       166,320 Weighted average number of shares outstanding         27,000 EPS EPS per Share = 166,320/27,000 6.16

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