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Selected information about income statement accounts for the Reed Company is presented below (the company's fiscal year ends on December 31): Sales Cost of goods sold Administrative expenses Selling expenses Interest revenue Interest expense Loss on sale of assets of discontinued component 2018 $5,250,000 3,030,000 970,000 530,000 167,000 234,000 118,000 2017 $4,350,000 2,170,000 845.000 482,000 157,000 234,000 On July 1, 2018, the company adopted a plan to discontinue a division that qualifies as a component of an entity as defined by GAAP The assets of the component were sold on September 30, 2018, for $118,000 less than their book value. Results of operations for the component (included in the above account balances) were as follows: Sales Cost of goods sold Administrative expenses Selling expenses Operating income before taxes 1/1/18-9/30/18 $ 570,000 (375, 000) (67,000) (37,000) $ 91,000 2017 $ 670,000 (422,000) (57,000) (47,000) $ 144,000 In addition to the account balances above, several events occurred during 2018 that have not yet been reflected in the above accounts: 1. A fire caused $67,000 in uninsured damages to the main office building. The fire was considered to be an infrequent but not unusual event. 2. Inventory that had cost $57,000 had become obsolete because a competitor introduced a better product. The inventory was sold as scrap for $8,000. 3. Income taxes have not yet been recorded. Required: Prepare a multiple-step income statement for the Reed Company for 2018, showing 2017 information in comparative format, including income taxes computed at 40% and EPS disclosures assuming 800,000 shares of common stock. (Amounts to be deducted should be indicated with a minus sign. Round EPS answers to 2 decimal places.) REED COMPANY Comparative Income Statements For the Years Ended December 31 2018 2017 Sales revenue Cost of goods sold Gross profit (loss) Operating expenses: Administrative Selling Loss from fire damage Loss from write-down of obsolete inventory Total operating expenses Operating income Other income (expense): Interest revenue Interest expense Total other expenses (net) 0 0 0 0 0 0 0 Interest revenue Interest expense Total other expenses (net) Income from continuing operations before income taxes Income tax expense Income from continuing operations Discontinued operations: Income (loss) from operations of discontinued component Income tax benefit (expense) Income (loss) on discontinued operations Net income Earnings per share: Income from continuing operations Discontinued operations Net income $ 0 $ 0 For the year ending December 31, 2018, Benson Corporation had income from continuing operations before taxes of $1,360,000 before considering the following transactions and events. All of the items described below are before taxes and the amounts should be considered material. 1. In November 2018, Benson sold its Pancake Village restaurant chain that qualified as a component of an entity. The company had adopted a plan to sell the chain in May 2018. The income from operations of the chain from January 1, 2018, through November was $176,000 and the loss on sale of the chain's assets was $332,000. 2. In 2018, Benson sold one of its six factories for $1,520,000. At the time of the sale, the factory had a book value of $1,260,000. The factory was not considered a component of the entity 3. In 2016, Benson's accountant omitted the annual adjustment for patent amortization expense of $136,000. The error was not discovered until December 2018 Required: Prepare Benson's income statement, beginning with income from continuing operations before taxes, for the year ended December 31, 2018. Assume an income tax rate of 20%. Ignore EPS disclosures. (Amounts to be deducted should be indicated with a minus sign.) BENSON CORPORATION Partial Income Statement For the Year Ended December 31, 2018 Income from continuing operations before income taxes la Income from continuing operations Discontinued operations: Loss on discontinued operations