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 revenue $4,700,000 $3,800,000 2,920,000 2,060,000 860,000 420,000 156,000 212,000 Cost of goods sold Administrative expense Selling expense 735,000 362,000 146,000 212,000 Interest revenue Interest expense Loss on sale of assets of discontinued component 72,000 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 $72,000 less than their book value. Results of operations for the component (included in the above account balances) were as follows: 1/1/2021- 9/30/2021 $ 460,000 |(320,000) (56,000) (26,000) 2020 Sales revenue $560,000 (356,000) (46,000) (26,000) Cost of goods sold Administrative expense Selling expense Operating income before $ 132,000 58,000 taxes 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 $56,000 in uninsured damages to the main office building. The fire was considered to be an unusual event. 2. Inventory that had cost $46,000 had become obsolete because a competitor introduced a better product. The inventory was written down to its scrap value of $6,000. 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 500,000 shares of outstanding common stock. (Amounts to be deducted should be indicated with a minus sign. Round EPS answers to 2 decimal places.) Answer is complete but not entirely correct REED COMPANY Comparative Income Statements For the Years Ended December 31 2021 2020 $ 4,240,000 2,600,000 1,640,000 Sales revenue 3,240,000 1,704,000 1,536,000 Cost of goods sold Gross profit (loss) Operating expenses: Administrative expense Selling expense Loss on building (fire damage) Loss on inventory write-down 689,000 336,000 804,000 394,000 56,000 40,000 Total operating expenses Operating income Other income (expense): 1,294,000 346,000 1,025,000 511,000 156,000 (212,000 (56,000) 290,000 146,000 (212,000) (66,000) 445,000 111,250 333,750 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 from operations of discontinued component 72,500 217,500 132,000 (24,400 X 107,600 $ 441,350 (14,000 3,200X (10,800) $206,700 Income tax benefit Income (loss) on discontinued operations Net income Earnings per share: Income from continuing operations Income on discontinued operations Net income 0.96X $ 1.32X 0.20 1.12X $ (0.03)X $ 0.07X $