Eastern Aviation operated both an airline and several restaurants located near airports. During the year just...

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Accounting

Eastern Aviation operated both an airline and severalrestaurants located near airports. During the year just ended, allrestaurant operations were discontinued and the following operatingresults were reported.
Continuing operations(airline):
Net sales $ 27,560,000
Costs and expenses 21,660,000
Otherdata:
Operating income fromrestaurants (net of income tax) 432,000
Gain on sale of restaurants (netof income tax) 2,478,000
Nonrecurring loss 1,200,000
All of these amounts are before income taxes unless indicatedotherwise. The company's income tax rate is 40 percent. Thenonrecurring loss resulted from damage to a warehouse that is notrelated to the discontinued restaurant operations. Eastern Aviationhad 1,000,000 shares of capital stock outstanding throughout theyear.
Required:
a. Prepare a condensed income statement,including proper presentation of the discontinued restaurantoperations and the nonrecurring loss. Include all appropriateearnings per share figures.
b. Assume that you expect the profitability ofEastern Aviation operations to decline by 5 percent next year, andthe profitability of the restaurants to decline by 10 percent. Whatis your estimate of the company’s net earnings per share nextyear?

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Part a EASTERN AVIATION CONDENSED INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31 20XX Net sales 27560000 Costs and expenses excluding tax on continuing operations 21660000 Income before tax 5900000 Less Tax at 40 2360000 See Answer

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Continuing operations(airline):
Net sales	$	27,560,000
Costs and expenses		21,660,000
Otherdata:
Operating income fromrestaurants (net of income tax)		432,000
Gain on sale of restaurants (netof income tax)		2,478,000
Nonrecurring loss		1,200,000