Question
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
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 (airline): | |||
Net sales | $ | 27,560,000 | |
Costs and expenses | 21,660,000 | ||
Other data: | |||
Operating income from restaurants (net of income tax) | 432,000 | ||
Gain on sale of restaurants (net of income tax) | 2,478,000 | ||
Nonrecurring loss | 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.
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, and the profitability of the restaurants to decline by 10 percent. What is your estimate of the companys net earnings per share next year?
I believe I am missing some numbers here is what I have so far
EASTERN AVIATION Income Statement For the Year Ended December 31, Current Year Net sales 27,560,000 21,660,000 Costs and expenses Income before income tax $ 5,900,000 Income tax expense $ 5,900,000 Income from continuing operations Discontinued operations: Operating income from restaurants $ 432,000 Gain on sale of restaurants 2,478,000 2,910,000 $ 8,810,000 Net income $ 2.82 Earnings per share of common stock: Income from continuing operations Income from discontinued operations Net earnings 2.91 $ 5.73Step by Step Solution
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