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Selected information about income statement accounts for the Reed Company is presented below (the company's fiscal year ends on December 31): 2018 2017 Sales $

Selected information about income statement accounts for the Reed Company is presented below (the company's fiscal year ends on December 31):

2018 2017
Sales $ 4,500,000 $ 3,600,000
Cost of goods sold 2,880,000 2,020,000
Administrative expenses 820,000 695,000
Selling expenses 380,000 332,000
Interest revenue 152,000 142,000
Interest expense 204,000 204,000
Loss on sale of assets of discontinued component 58,000

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 $58,000 less than their book value. Results of operations for the component (included in the above account balances) were as follows:

1/1/18-9/30/18 2017
Sales $ 420,000 $ 520,000
Cost of goods sold (300,000 ) (332,000 )
Administrative expenses (52,000 ) (42,000 )
Selling expenses (22,000 ) (32,000 )
Operating income before taxes $ 46,000 $ 114,000

In addition to the account balances above, several events occurred during 2018 that have not yet been reflected in the above accounts:

A fire caused $52,000 in uninsured damages to the main office building. The fire was considered to be an infrequent but not unusual event.

Inventory that had cost $42,000 had become obsolete because a competitor introduced a better product. The inventory was sold as scrap for $5,000.

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 40% and EPS disclosures assuming 300,000 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
Sales revenue $4,080,000 $3,080,000
Cost of goods sold 2,580,000 1,688,000
Gross profit (loss) 1,500,000 1,392,000
Operating expenses:
Administrative 768,000 653,000
Selling 358,000 300,000
Loss from fire damage 52,000 0
Loss from write-down of obsolete inventory 37,000 0
Total operating expenses 1,215,000 953,000
Operating income 285,000 439,000
Other income (expense):
Interest revenue 152,000 142,000
Interest expense (204,000) (204,000)
Total other expenses (net) (52,000) (62,000)
Income from continuing operations before income taxes 233,000 377,000
Income tax expense 93,200 150,800
Income from continuing operations 139,800 226,200
Discontinued operations:
Income (loss) from operations of discontinued component
Income tax benefit (expense)
Income (loss) on discontinued operations 0 0
Net income $139,800 $226,200
Earnings per share:
Income from continuing operations
Discontinued operations
Net income

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