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:
   1. Sales salaries ($6,000): $3,000 to Division 1, $2,000 to Division 2, and $1,000 to the remaining segments.
   2. Sales commissions ($4,000): 2% of net sales in all segments.
   3. Delivery costs ($5,000): 60% to Division 1, 30% to Division 2, and 10% to the remaining segments.
   4. 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.
   5. 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:
   1. Bad debts ($2,000): 1% of net sales in all segments.
   2. 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.
   3. 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.
   4. 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 securities. 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 included 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 to two decimal places.

REED COMPANY
Income Statement
For Year Ended December 31, 2019
Sales revenues (net)		$200000
Cost of goods sold		-121120
Gross profit		78880
Operating Expenses
Selling expenses	26000
Administrative expenses	16000
Depreciation expense	7000
Total operating expenses		-49000
Operating Income		29880
Other Items
Interest revenue	1000
Loss due to flood	8000
Interest expense	4880	11880
Pretax income		18000
Income tax expense		5400
Net income		12600
Earnings per share		2.52
Net income		$fill in the blank c0cd480cc073004_31

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
	Reportable Operating Segment 1	Reportable Operating Segment 2	All Other Segments	Total Results
Segment revenues (sales)	$98000	60000	42000	$200000
Segment profit (pretax)	17100	$10830	9750	37680
General corporate expenses				24000
Interest revenue				1000
Loss on flood				-8000
Interest expense				-4880
Pretax income				$18000
Identifiable assets at December 31, 2019	135000	87000	54000	276000
General corporate assets				24000
Total assets at December 31, 2019				300000

4. Next Level Compute the profit margin before income taxes and pretax return on identifiable assets for Divisions 1 and 2, and for the other divisions. Enter percentage as whole number and two decimal places. (e.g, .1637522 is entered as 16.38).

	Profit margin before income taxes	Pretax return on identifiable assets
Division 1:
Division 2:
Other Divisions:

Reconciliations. A company must reconcile the reportable segments' total revenues, total profit or loss, and total assets to the corresponding company totals. The revenues, profit or loss, and assets of the "all other" segment category must be included in these reconciliations.