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Question 7 (of 9) 10.00 points Selected information about income statement accounts for the Reed Company is presented below (the company's fiscal year ends on December 31) 2016 2015 5,100,000 4,200,000 Cost of goods sold 3,000,000 2,140,000 Administrative expenses 815,000 Selling expenses 452,000 154,000 Loss on sale of assets of discontinued component 106,000 On July 1, 2016, the company adopted a plan to discontinue a division that qualifies as a component of an entity as defined by GAAP. The assets of the component were sold on September 30, 2016, for S106.000 less than their book value. Results of operations for the component (included in the above account balances) were as follows: 1/1/16 93016 2015 540,000 640,000 Cost of goods sold 1360,000) 404,000) Administrative expenses (64.000) (54.000) Selling expenses (34,000) (44,000) 82.000 138.000 Operating income before taxes In addition to the account balances above, several events occurred during 2016 that have not yet been in the above accounts: 1. Afire caused S64,000 in uninsured damages to the main office building. The fire was considered to be an infrequent but not unusual event. Inventory that had cost$54.000 had become obsolete because a competitor introduced a better product. The inventory was sold as scrap for S5,000. Income taxes have not yet been recorded 888

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