Problem 4-1 Comparative income statements; multiple-step format [LO4-1, 4-3, 4-4, 4-5] Selected information about income statement accounts for the Reed Company is presented below (the company's fiscal year ends on December 31): Sales Cost of goods sold Administrative expenses Selling expenses Interest revenue Interest expense Loss on sale of assets of discontinued component 2018 2017 $5,000,000 $4,100,000 2,980,000 2,120,000 920,000 795,000 480,000 432,000 162,000 152,000 224,000 224,000 98,000 On July 1, 2018, 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, 2018, for $98,000 less than their book value. Results of operations for the component (included in the above account balances) were as follows: Sales Cost of goods sold Administrative expenses Selling expenses Operating income before taxes 1/1/18-9/30/18 $ 520,000 (350,000) (62,000) (32,000) $ 76,000 2017 $ 620,000 (392,000) (52,000) (42,000) $ 134,000 In addition to the account balances above, several events occurred during 2018 that have not yet been reflected in the above accounts: 1. A fire caused $62,000 in uninsured damages to the main office building. The fire was considered to be an infrequent but not unusual event. 2. Inventory that had cost $52,000 had become obsolete because a competitor introduced a better product. The inventory was sold as scrap for $5,000. 3. Income taxes have not yet been recorded. Required: Prepare a multiple-step income statement for the Reed Company for 2018, showing 2017 information in comparative format, including income taxes computed at 30% and EPS disclosures assuming 500,000 shares of 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 2018 2017