Eastern Aviation operated both an airline and several restaurants located near airports. During the year just ended, all restaurant operations were discontinued and the following operating results were reported. Continuing operations (irline) Net sales costs and expenses Other datai Operating income from restaurants (net of income tax) Gain on sale of restaurants (net of incone tax) Nonrecurring loss $ 27.560,000 21,660,000 432,000 2,478,000 1.200,000 All of these amounts are before income taxes unless indicated otherwise. The company's income tax rate is 40 percent. The nonrecurring loss resulted from damage to a warehouse that is not related to the discontinued restaurant operations. Eastern Aviation had 1,000,000 shares of capital stock outstanding throughout the year Required: a. Prepare a condensed income statement, including proper presentation of the discontinued restaurant operations and the nonrecurring loss. Include all appropriate earnings per share figures. b. Assume that you expect the profitability of Eastern Aviation operations to decline by 5 percent next year. What is your estimate of the company's net earnings per share next year? hnh nh l EASTERN AVIATION Income Statement For the Year Ended December 31, Current Year Net sales $ 27,560,000 Costs and expenses (21,660,000) Loss from warehouse damage (1,200,000) Income before income tax $ 4,700,000 Income tax expense 1.160,000 Income from continuing operations $ 3,540,000 Discontinued operations: Operating income from restaurants $ 432,000 Gain on sale of restaurants 2,478,000 Income before extraordinary items 6,450,000 X 9,360,000 Net Income $ 12,900,000 Earnings per share of common stock: $ 2.82 Earnings from continuing operations 2.91 Earnings from discontinued operations $ 5.73 Net earnings SIX Required Required B > U otherwise. The company's income tax rate is 40 percent. The nonrecurring loss resulted from damage to a warehouse that is not related to the discontinued restaurant operations. Eastern Aviation had 1,000,000 shares of capital stock outstanding throughout the year. Required: a. Prepare a condensed income statement, including proper presentation of the discontinued restaurant operations and the nonrecurring loss. Include all appropriate earnings per share figures. b. Assume that you expect the profitability of Eastern Aviation operations to decline by 5 percent next year. What is your estimate of the company's net earnings per share next year? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required A Required 8 Assume that you expect the profitability of Eastern Aviation operations to decline by 5 percent next year. What is your estimate of the company's net earnings per share next year? (Round your intermediate calculations and final answer to 2 decimal places.) Net camnings $ 3.36 per share
