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Lady bird [3.3K]
2 years ago
6

Chance Company had two operating divisions, one manufacturing farm equipment and the other office supplies. Both divisions are c

onsidered separate components as defined by generally accepted accounting principles. The farm equipment component had been unprofitable, and on September 1, 2018, the company adopted a plan to sell the assets of the division. The actual sale was completed on December 15, 2018, at a price of $600,000. The book value of the division’s assets was $1,000,000, resulting in a before-tax loss of $400,000 on the sale.
The division incurred a before-tax operating loss from operations of $120,000 from the beginning of the year through December 15. The income tax rate is 30%. Chance’s after-tax income from its continuing operations is $440,000.Required:Prepare an income statement for 2016 beginning with income from continuing operations. Include appropriate EPS disclosures assuming that 100,000 shares of common stock were outstanding throughout the year. (Amounts to be deducted should be indicated with a minus sign. Round EPS answers to 2 decimal places.)
Business
1 answer:
S_A_V [24]2 years ago
5 0

Answer:

Net income = $76,000

Earning per share (EPS):

Income from continuing operations per share = $4.40 per share

Loss from discontinued operations per share = -$3.64 per share

Net Income per share = $0.76 per share

Explanation:

Note: See the attached excel file for the income statement.

Also Note: Two years (2016 and 2018) were mistakenly mentioned in the question instead of just one of them. I therefore picked 2016 to prepare the income statement.

In the attached excel file, the earning per share (EPS) is calculated as follows:

Number of shares outstanding = 100,000 shares

Income from continuing operations per share  = Income from continuing operations / Number of shares outstanding = $440,000 / 100,000 = $4.40 per share

Loss from discontinued operations per share = Loss from discontinued operations / Number of shares outstanding = -$364,000 / 100,000 = -$3.64 per share

Net Income per share = Net Income / Number of shares outstanding = $76,000 / 100,000 = $0.76 per share

Download xlsx
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Answer:

33,793   pizzas

Explanation:

The annual break-even sales level for the number of pizzas sold in the location is computed using the break-even sales units formula  below:

break-even sales=fixed costs/contribution margin per pizza

fixed costs=$245,000

contribution margin per pizza=selling price-variable cost

selling price=$12.50

variable cost=selling price*42%

variable cost=$12.50*42%

variable cost=$5.25

contribution margin per pizza=$12.50-$5.25 =$7.25

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Consider the stock of ocean tuna which is massively overfished. it is rational for an individual to exploit the resource rather
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3 years ago
Based on the following information: Rate of Return If State Occurs State of Probability of Economy State of Economy Stock A Stoc
Sonja [21]

The expected return for stock A and B is 8.55% and 15.11% respectively.

<h3>What is the Expected return?</h3>

= (Probability of Recession × Return during recession) + (Probability of normal × Return during normal) + (Probability of boom × Return during boom)

Expected return for stock A:

= (0.20 * .05) + (0.57 * 0.08) + (0.23 * 0.13)

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Expected return for stock B:

= (0.20 * 0.20) + (0.57 * 0.09) + (0.23 * 0.26)

= 0.1511

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Read more about Expected return

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A company borrowed $15,000 by signing a 120-day promissory note at 10%. The total interest due on the maturity date is: (Use 360
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Answer: $500

Explanation:

Interest for the period = Amount borrowed * Interest rate * 120/360 days

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3 years ago
Celine Dion Company issued $600,000 of 10%, 20-year bonds on January 1, 2020, at 102. Interest is payable semiannually on July 1
anzhelika [568]

Answer:

The Journal entries are as follows:

(a) On January 1, 2020

Cash A/c(6,000 bonds × $102) Dr. $612,000

         To Bonds payable                                  $600,000

         To premium on bonds payable             $12,000

(To record the issuance of the bonds)

Workings:

premium on bonds payable = $612,000 - $600,000

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(b) On July 1, 2020

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(To record the interest expense)

Workings:

Cash = $600,000 × (6/12) × 10%

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Premium on bonds payable = $12,000 ÷ 40 periods

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(c) On December 31, 2020

Interest expense A/c                  Dr. $29,700

Premium on bonds payable A/c Dr. $300

        To Interest payable A/c                            $30,000

(To record the accrual of interest expense)

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