It keeps saying that $375,000 as the income from continuing operations from taxes is wrong.....What am I do wrong here?
Selected information about income statement accounts for the Reed Company is presented below (the company's fiscal year ends on December 31): 2020 Sales revenue Cost of goods sold Administrative expense Selling expense Interest revenue Interest expense Loss on sale of assets of discontinued component 2021 $4,400,000 $3,500,000 2,860,000 2,000,000 800,000 675,000 360,000 302,000 150,000 140,000 200,000 200,000 48,000 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 $48,000 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 $ 400,000 (290,000) (50,000) (20,000) $ 40,000 2020 $ 500,000 (320,000) (40,000) (20,000) $ 120,000 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 $50,000 in uninsured damages to the main office building. The fire was considered to be an unusual event. 2. Inventory that had cost $40,000 had become obsolete because a competitor introduced a better product. The inventory was written down to its scrap value of $5,000. 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 300,000 shares of outstanding 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 2021 2020 Sales revenue $ 4,000,000 $3,000,000 2,570,000 1,680,000 1,430,000 1,320,000 Cost of goods sold Gross profit (loss) Operating expenses: Administrative expense Selling expense Loss on building (fire damage) Loss on inventory write-down 750,000 340,000 635,000 282,000 (50,000) (35,000) 1,005,000 425,000 917,000 403,000 Total operating expenses Operating income Other income (expense): Interest revenue Interest expense Total other income, net Income from continuing operations before income taxes 150,000 (200,000) (50,000) 375,000 140,000 (200,000) (60,000) 375,000 0 Income from continuing operations Discontinued operations: Income (loss) on discontinued operations 0 0 Net income $ 375,000 $ 0 Earnings per share: Net income
