Problem 4-1 Comparative inoome statements: multiple-step format [LBJ-1. 4-3. 4-4, 4-5] Selected Information about Income statement acoounts for the Reed Company Is presented bah-w (the
mr’npany’s ?scal year ends on December 31}: 2015 2.01 5
Sales 5 5.100.000 5 4.200.000
?oat of goods sold 3.001000 2.140.000
Admlnlstratlve expenses 040.000 015.000
Selllrrg expenses 501000 452.000
Interest revenue 154.000 154.000
Interest expense 225.000 225.000
Loss on sale of assets ofdiscontlnued component 105.000 — 0n Jul}.I 1. 2015. the oomp-anv adopted a plan to dlsoontinue a dlvislon that qualltles as a component of
an enlltv as de?ned by GAME The assets of the component were sold on September 30. 2015. for
5105.000 less than thelr book value. Results of operallons for the oomponent {Included In the above aooount balanossjl were as 1ollovrs’. 1J‘1I1E-E’S?t’1? 21015 Sales 5 540.000 5 540.000
?oat of goods sold {200.000} {404.030}
Admlnlstratlve expenses [04.000] [54.0003
Selllrrg expenses [34.000]: {44.030}
?peratlng Income beforetaxes $ 02.000 5 120.030 In addltlon to the aooount balances above. several events occurred durlng 2015 that have notvet been
reflected In the above accounts:
1. A?re caused 554.000 ln unlnsured damages to the male of?ce bulldlng. The Ilre Iultras consldered to be
an Infrequent but not unusual event.
2. Inventory that had oust $54,000 had become obsolete because a competitor Introduced a better product.
The Inventonr 1.Ivas sold as scrap for 55.000.
2. Income taxes have notvet been recorded. Requlred:
Prepare a multiple-step Inoome statement for the Reed ananv for 2015. sluswlng 2015 Information In mr’nparatlve 1on’nat. includlng Inoome taxes computed at 4051: and EPS dleclosures assumlng 500.000
shares of oommon stock. [Amounts to be deducted should be Indicated with a mlnus slgn. Round
EPB answers to 2 decimal planed