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Esquire Comic Book Company had income before tax of $1,800,000 in 2021 before considering the following material items:
1. Esquire sold one of its operating divisions, which qualified as a separate component according to generally accepted accounting principles. The before-tax loss on disposal was $420,000. The division generated before-tax income from operations from the beginning of the year through disposal of $660,000.
2. The company incurred restructuring costs of $85,000 during the year.
Required:
Prepare a 2021 income statement for Esquire beginning with income from continuing operations. Assume an income tax rate of 25% Ignore EPS disclosures.

Sagot :

jepessoa

Answer:

Esquire Comic Book Company

Partial Income Statement

For the year ended December 31, 2021

Income from continuing operations                            $1,800,000

Income tax expense                                                         ($450,000)

Net income from continuing operations                         $1,350,000

Discontinued operations Gain/Loss

    Loss from disposal                                 ($420,000)

    Income from discontinued operations   $660,000

    Income taxes                                            ($60,000)     $180,000

Net income                                                                       $1,530,000

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