Page 3 answer to income statement and net income under earnings per share.

Vice/run/html5/handler.jsp?id. Comp/ ChS (4,10,1") Roblem/ Intermediate Ace 15/handler 8 Ace 22) Income Statement and Segment Reporting The following items are based on Reed Company's December 31, 2019, adjusted trial balance: Cost of goods sold $121,120 Loss due to flood (pretax) $ 8,000 Interest expense 4,880 Sales (net) 200,000 Depreciation expense 7,000 Administrative expenses 16,000 Selling expenses 26,000 Interest revenue 1,000 Additional information: 1. Reed had 5,000 shares of common stock outstanding the entire year. 2. The income tax rate is 30% on all items. 3. Reed operates several divisions, two of which, Divisions 1 and 2, are reportable operating segments. 4. No intersegment sales are made by any division. Of the total sales (net), Division 1 made 49%; Division 2, 30%; and the remaining segments, 21%. 5. Cost of goods sold as a percentage of net sales in each division was: Division 1, 62%; Division 2, 60%; other segments, 58%. 6. Selling expenses consist of sales salaries, sales commissions, delivery costs, advertising, and miscellaneous expenses. These are traceable to the segments as follows: a. Sales salaries ($6,000): $3,000 to Division 1, $2,000 to Divi ion 2, and $1,000 to the remaining segments. b. Sales commissions ($4,000): 2% of net sales in all segment: c. Delivery costs ($5,000): 60% to Division 1, 30% to Division 2, and 10% to the remaining segments. d. Advertising ($10,500): Of the total, $1,200 was spent on general advertising. The remainder was spent as follows: $4,600 in Division 1, $3,200 in Division 2, and $1,500 in the other segments. e. The miscellaneous selling expenses of $500 are considered common costs and are not allocated to any segments. 7. Administrative expenses consist of bad debts, administrative salaries, property taxes, and miscellaneous expenses. These are allocable to the segments as follows: a. Bad debts ($2,000): 1% of net sales in all segments. b. Administrative salaries ($10,000): Of the total, $2,100 are considered general corporate salaries. The remainder is allocated $3,800 to Division 1, $2,500 to Division 2, and $1,600 to the other segments. c. Property taxes ($3,000): Of the total, $1,600 are general corporate expenses. Of the remainder, 40% is allocable to Division 1, 35% to Division 2, and 25% to the remaining segments. d. The miscellaneous administrative expenses of $1,000 are considered common costs and are not allocated to any segments. 8. Depreciation expense is listed as a separate item on the income statement. Of the total, $1,400 is a general corporate expense. Of the remainder, 40% is allocable to Division 1, 30% to Division 2, and 30% to the remaining segments. 9. Interest revenue is from corporate investments in marketable s curities. Interest expense is related to corporate bonds used to finance general operating activities. 10. A flood causing the material pretax loss occurred in Division 1. 11. Of the $300,000 total assets on December 31, 2019, 45% are assets of Division 1, 29% are assets of Division 2, 18% are assets of the remaining segments, and 8% are assets related to corporate headquarters. 12. Capital expenditures amounted to $25,000 in Division 1 and $6,000 in Division 2 during 2019 and are include in the total assets on December 31, 2019. Required 1. Prepare a 2019 multiple-step income statement for the Reed. Round earnings per share computation FI Reportable Operating Reportable Operating Segment 1 Segment 2 $ 60,000 All Other Total Segments Results $ 42,000 98,000 $ 200,000 Segment revenues (sales) $ $ $ $ Segment profit (pretax) 17,100 1 General corporate expenses Interest revenue Loss on flood $ Interest expense $ x Pretax income $ $ Identifiable assets at December 31, 2019 General corporate assets Total assets at December 31, 2019 Feedback Check My Work The following partially completed schedule will help you to organize the information for this requirement. Working Paper for Segment Reporting All Operating Segments 1 2 Remaining Segment Totals Unallocated Totals $98,000 $60,000 $42,000 $200,000 O $200,000 Total revenues (sales) Operating expenses: Cost of goods sold two decimal places. REED COMPANY Income Statement For Year Ended December 31, 2019 $ Sales revenues (net) 200,000 Cost of goods sold -121,120 $ Gross profit 78,880 Operating Expenses Selling expenses 26,000 Administrative expenses 16,000 Depreciation expense 7,000 Total operating expenses -49,000 Operating Income 29,880 Other Items Interest revenue 1,000 Loss due to flood 8,000 -4880? $-11,880 Interest expense 18,000 Pretax income Income tax expense Net Income 7 12,600 handier.jsp?id Net income Earnings per share $ Net income Feedback Check My Work The following partially completed schedule will help you to organize the information for this requirement. Reed Company Income Statement For Year Ended December 31, 2019 $200,000 Sales revenues (net) Cost of goods sold Gross profit Operating expenses: Selling expenses Administrative expenses Depreciation expense Total operating expenses (49,000) Operating income Other items: ? ? (3,880) Pretax income Income tax expense Net income $12,600 Earnings per share (5,000 shares of common stock): Net income 2. Prepare a separate schedule that discloses the revenues, profit, and assets of Divisions 1 and 2, and the remaining operating segments. REED COMPANY Industry Segment Financial Results For Year Ended December 31, 2019