Question

BE4.4 (LO 2, 3) Finley Corporation had income from continuing operations of $10,600,000 in 2020. During 2020, it disposed of its restaurant division at an after-tax loss of $189,000. Prior to disposal, the division operated at a loss of $315,000 (net of tax) in 2020 (assume that the disposal of the restaurant division meets the criteria for recognition as a discontinued operation). Finley had 10,000,000 shares of common stock outstanding during 2020. Prepare a partial income statement for Finley beginning with income from continuing operations. E4.5 (LO 2) (Multiple-Step and Single-Step Statements) Two accountants for the firm of Elwes and Wright are arguing about the merits of presenting an income statement in a multiple-step versus a single-step format. The discussion involves the following 2020 information related to P. Bride Company +($000 omitted). Administrative expense Officers' salaries $ 4,900 Depreciation of office furniture and equipment 3,960 Cost of goods sold 60,570 Rent revenue 17,230 Selling expense Delivery expense 2,690 Sales commissions 7,980 Depreciation of sales equipment 6,480 Sales revenue 96,500 Income tax 9,070 Interest expense 1,860 Instructions a. Prepare an income statement for the year 2020 using the multiple-step form. Common shares outstanding for 2020 total 40,550 (000 omitted). b. Prepare an income statement for the year 2020 using the single-step form. c. Which one do you prefer? Discuss.

Answer 1

BE4.4

Finley Corporation
Income Statement (Partial)
For the Year Ended 2020
Income from continuing operations		10600000
Discontinued operations:
Loss from operation of discontinued division (net of tax)	315000
Loss from disposal of discontinued division (net of tax)	189000	504000
Net income		10096000
Earnings per share:
Income from continuing operations		1.06
Discontinued operations		-0.05
Net income		1.01

Working:

Earnings per share:

Income from continuing operations = $10600000/10000000 = $1.06

Discontinued operations = $-504000/10000000 = $-0.05

Net income = $10096000/10000000 = $1.01

Per Chegg guidelines the first question has been answered. Please post the remaining independent question separately. Thank you.