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Problem $2$

Farr Company

INCOME STATEMENT

For the Year Ended December $31,2021$

Sales revenue $$1,600,000$

Cost of goods sold $880,000$

Gross profit $720,000$

Selling and administrative expenses $290,000$

Income from operations $430,000$

Other revenue $120,000$

Other expenses $(100,000)$

Income before income taxes $450,000$

Income taxes $(450,000\backslash$times $\mathrm{.}20)90,000$

Income from continuing operations $360,000$

Discontinued operations loss, net of applicable income taxes of $$58,000(232,000)$

Net income $ $128,000$

Per share of common stock$$

Income from continuing operations $$4\mathrm{.}50(360,000/80,000)$

Discontinued operations item, net of tax $(2\mathrm{.}90)(232,000/80,000)$

Net income $$1\mathrm{.}60$

Wilcox Corporation had income from continuing operations of $$650,000($after taxes$)$ in $2020.$ In addition, the following information, which has not been considered, is as follows.

$1.$ A machine was sold for $$140,000$ cash during the year at a time when its book value was $$110,000.($Depreciation has been properly recorded.$)$ The company often sells machinery of this type.

$2.$ Wilcox decided to discontinue its stereo division in $2020.$ During the current year, the loss on the disposal of this component of the business was $$210,000$ less applicable taxes.

Instructions

Present in good form the income statement of Wilcox Corporation for $2020$ starting with "income from continuing operations." Assume that Wilcox's tax rate is $20\%$ and $200,000$ shares of common stock were outstanding during the year.

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