Income Statement, Lower Portion At the beginning of 2016, Cameron Company\'s ret
ID: 2537584 • Letter: I
Question
Income Statement, Lower Portion
At the beginning of 2016, Cameron Company's retained earnings was $221,700. For 2016, Cameron has calculated its pretax income from continuing operations to be $192,000. During 2016, the following events also occurred:
During July, Cameron sold Division M (a component of the company). It has determined that the pretax income from the operations of Division M during 2016 totals $46,300 and that a pretax loss of $48,800 was incurred on the sale of Division M.
Cameron had 35,000 shares of common stock outstanding during all of 2016. It declared and paid a $2 per share cash dividend on this stock.
Required:
Assuming that all the "pretax" items are subject to a 30% income tax rate:
1. Complete the lower portion of Cameron Company's 2016 income statement, beginning with "Pretax Income from Continuing Operations." Round earnings per share computations to two decimal places.
2. Prepare an accompanying statement of retained earnings for the year ended December 31, 2016.
CAMERON COMPANY Partial Income Statement For Year Ended December 31, 2016 $ $ Results from discontinued operations $ $ Components of Income EPS $ $Explanation / Answer
1) CAMERON COMPANY Partial Income Statement For Year Ended December 31, 2016 Pre-tax income from continuing operations 192000 Income tax expense 57600 Income from continuing operations 134400 Results from discontinued operations: Income from operations of Division M, net of tax = 46300-13890 = 32410 Loss from sale of Division less income tax benefit = -48800+14640 = -34160 Loss on discontinued operations -1750 Net Income 132650 Components of Income: EPS Income from continuing operations 3.84 Loss on discontinued operations -0.05 Net Income 3.79 2) CAMERON COMPANY Statement of Retained Earnings For Year Ended December 31, 2016 Balance as on December 31, 2015 221700 Add: Net income 132650 354350 Less: Dividends paid 70000 Balance as on December 31, 2016 284350