Selected information about income statement accounts for the Reed Company is presented below (the company's fiscal year ends on December 31): 2021 2020 Sales $ 4,400,000 $ 3,500,000 Cost of goods sold 2,860,000 2,000,000 Administrative expenses 800,000 675,000 Selling expenses 360,000 302,000 Interest revenue 150,000 140,000 Interest expense 200,000 200,000 Loss on sale of assets of discontinued component 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: 1/1/12021-9/30/2021 , 2020 Sales $ 400,000 $ 500,000 Cost of goods sold (290,000) (320,000) Administrative expenses (50,000) (40,000) Selling expenses (20,000) (20,000) Operating income before taxes $ 40,000 $ 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 infrequent but not unusual event. 2. Inventory that had cost $40,000 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 2021, showing 2020 information in comparative format, including income taxes computed at 25% 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.)

Problem 04-01 cow REED COMPANY Comparative Income Statements for the Years Ended December 31 2021 2020 15 16 20 Sales revenue Cost of goods sold Gross profit Operating expenses: Administrative expense Selling expense Loss on building (fire damage) Loss on inventory write-down Total operating expenses Operating income Other income (expense): Interest revenue Interest expense Total other income (net) Income from continuing operations before income taxes Income tax expense Income from continuing operations Discontinued operations: Income (loss) from operations of discontinued component (including loss on disposal of $48,000 in 2021) Income tax benefit (expense) Income (loss) on discontinued operations Net income 24 30 31 34 35 300,000 shares Earnings per share: Income from continuing operations before Discontinued operations Net income