Question

Sheffield Corporation had income from continuing operations of $10,745,300 in 2020. During 2020, it disposed of its restaurant division at an after-tax loss of $198,600. Prior to disposal, the division operated at a loss of $317,300 (net of tax) in 2020 (assume that the disposal of the restaurant division meets the criteria for recognition as a discontinued operation). Sheffield had 10,000,000 shares of common stock outstanding during 2020. Prepare a partial income statement for Sheffield beginning with income from continuing operations.

Answer 1

Answer: Please see explanation column for answers

Explanation:

Partial income statement for Sheffield Corporation

Income from continuing operations                                $10,745,300

Discontinued operations:

Loss from operation of discontinued      $317,300

restaurant division, net of tax  

Loss of disposal of restaurant division,   $198,600

net of tax

  Total of the losses                                                                    $515,900                                                                                          

Net income                                                                                $10,229,400

(Income from continuing operations  -Losses from Discontinued operations)

Earnings per share

Income from continuing operations   $10,745,300/10,000,000 shares

                                               =$1.07453

Discontinued operations $515,900   /10,000,000 shares

                            =$0.05159

Earnings per share of net income   ($1.07453-$0.05159) =$1.02294≈$1.02

Net Income for  Sheffield Corporation is $10,229,400 with Earnings per share $1.02