Comparative Income Statements For the Years Ended December 31 2020 Sales revenue 2021 $ 4,680,000 2,655,000 2,025,000 $ 3,680,000 1,748,000 1,932,000 Cost of goods sold Gross profit (loss) Operating expenses: Administrative expense Selling expense Loss on building (fire damage) Loss on inventory write-down 903,000 788,000 435,000 OOOO 493,000 (67,000) (49,000) 1,280,000 1,223,000 709,000 745,000 167,000 157,000 (234,000) (234,000) (67,000) (77,000) 678,000 X 632,000 (169,500) X (158,000) 508,500 474,000 os Total operating expenses Operating income Other income (expense): Interest revenue Interest expense Total other income, net Income from continuing operations before income taxes Income tax expense Income from continuing operations Discontinued operations: Income from operations of discontinued component Income tax benefit (expense) Income (loss) on discontinued operations Net Earnings per share: Income from continuing operations Income on discontinued operations Net income (25,000) 6,250 (18,750) $ 489,750 154,000 (38,500) 115,500 $ 589,500 $ 0.61 X $ 0.59 0.14 (0.02) 0.59 X $ 0.73 Selected information about income statement accounts for the Reed Company is presented below (the company's fiscal year ends on December 31): Sales revenue Cost of goods sold Administrative expense Selling expense Interest revenue Interest expense Loss on sale of assets of discontinued component 2021 2020 $5,250,000 $4,350,000 3,030,000 2,170,000 970,000 845,000 530,000 472,000 167,000 157,000 234,000 234,000 116,000 On July 1, 2021, 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, 2021, for $116,000 less than their book value. Results of operations for the component (included in the above account balances) were as follows: Sales revenue Cost of goods sold Administrative expense Selling expense Operating income before taxes 1/1/2021-9/30/2021 $ 570,000 (375,000) (67,000) (37,000) $ 91,000 2020 $ 670,000 (422,000) (57,000) (37,000) $ 154,000 In addition to the account balances above, several events occurred during 2021 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 unusual event. 2. Inventory that had cost $57,000 had become obsolete because a competitor introduced a better product. The inventory was written down to its scrap value of $8,000. 3. Income taxes have not yet been recorded. Required: Prepare a multiple-step income statement for the Reed Company for 2021, showing 2020 information in comparative format, including income taxes computed at 25% and EPS disclosures assuming 800,000 shares of outstanding common stock. (Amounts to be deducted should be indicated with a minus sign. Round EPS answers to 2 decimal places.)
