During 2012, Vitos Corporation engaged in two complex transactions to improve the business-selling off a division and retiring bonds. The company has always issued a simple, single-step income statement, and the accountant has accordingly prepared the December 31 year-end income statements for 2011 and 2012, as shown below.

Robert Vitos, the president of Vitos Corporation, is pleased to see that both net income nad earnings per share increased by almost 33 percent from 2011 to 2012, and he intends to announce to the company's stockholders that the plan to improve the business has been successful.

Required
1. Recast the 2012 and 2011 income statements in proper multistep form, including allocating income taxes to appropriate items (assume a 30 percent income tax rate) and showing earnings per share figures (400,000 shares outstanding).
2. What is your assessment of Vitos Corporation's plan and business operations in 2012?

Transcribed Image Text:

Vitos Corporation Income Statements For the Years Ended December 31, 2012 and 2011 2012 2011 s 2,000,000 $2,400,000 (1,100,000) (,200,000) Net sales Cost of goods sold Operating expenses Income taxes expense Income from discontinued operations Gain on disposal of discontinued operations Extraordinary gain on retirement of bonds Net income Earnings per share (450,000) 300,000) 358,200) (270,000) 320,000 280,000 144,000 835,800 630,000 2.09 158