General Dynamics develops, produces, and supports innovative, reliable, and highly sophisticated military and commercial products. In July of a recent year, the corporation announced that its Quincy Shipbuilding Division (Quincy) will be closed following the completion of the Maritime Prepositioning Ship construction program.

Prior to discontinuance, the operating results of Quincy were net sales $246.8 million, income from operations before income taxes $28.3 million, and income taxes $12.5 million. The corporation’s loss on disposition of Quincy was $5.0 million, net of $4.3 million income tax benefits.

From its other operating activities, General Dynamics’ financial results were net sales $8,163.8 million, cost of goods sold $6,958.8 million, and selling and administrative expenses $537.0 million. In addition, the corporation had interest expense of $17.2 million and interest revenue of $3.6 million. Income taxes were $282.9 million.

General Dynamics had an average of 42.3 million shares of common stock outstanding during the year.

Instructions

With the class divided into groups, answer the following.

(a) Prepare the income statement for the year, assuming that the year ended on December 31, 2010. Show earnings per share data on the income statement. All dollars should be stated in millions, except for per share amounts. (For example, $8 million would be shown as $8.0)

(b) In the preceding year, Quincy’s earnings were $51.6 million before income taxes of $22.8 million. For comparative purposes, General Dynamics reported earnings per share of $0.61 from discontinued operations for Quincy in the preceding year.

(1) What was the average number of common shares outstanding during the preceding year?

(2) If earnings per share from continuing operations was $7.47, what was income from continuing operations during the preceding year? (Round to two decimals.)