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Selected information about income statement accounts for the Reed Company is presented below (the company's fiscal year ends on December 31):

		2018		2017
Sales	$	4,550,000	$	3,650,000
Cost of goods sold		2,890,000		2,030,000
Administrative expenses		830,000		705,000
Selling expenses		390,000		342,000
Interest revenue		153,000		143,000
Interest expense		206,000		206,000
Loss on sale of assets of discontinued component		62,000

On July 1, 2018, 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, 2018, for $62,000 less than their book value. Results of operations for the component (included in the above account balances) were as follows:

	1/1/18-9/30/18						2017
Sales		$	430,000				$	530,000
Cost of goods sold			(305,000	)				(338,000	)
Administrative expenses			(53,000	)				(43,000	)
Selling expenses			(23,000	)				(33,000	)
Operating income before taxes		$	49,000				$	116,000

In addition to the account balances above, several events occurred during 2018 that have not yet been reflected in the above accounts:

1. A fire caused $53,000 in uninsured damages to the main office building. The fire was considered to be an infrequent but not unusual event.
2. Inventory that had cost $43,000 had become obsolete because a competitor introduced a better product. The inventory was sold as scrap for $6,000.
3. Income taxes have not yet been recorded.

Required: Prepare a multiple-step income statement for the Reed Company for 2018, showing 2017 information in comparative format, including income taxes computed at 30% and EPS disclosures assuming 400,000 shares of common stock. (Amounts to be deducted should be indicated with a minus sign. Round EPS answers to 2 decimal places.)

PLEASE SOLVE AND SHOW HOW YOU GOT EARNINGS PER SHARE PART.

REED COMPANY Comparative Income Statements For the Years Ended December 31 Sales revenue 2018 $ 4,120,000 2,585,000 1,535,000 2017 $ 3,120,000 1,692,000 1,428,000 Cost of goods sold Gross profit (loss) Operating expenses: Administrative 662,000 309,000 Selling Loss from fire damage Loss from write-down of obsolete inventory 777,000 367,000 53,000 37,000 1,234,000 301,000 Total operating expenses 971,000 Operating income 457,000 Other income (expense): Interest revenue Interest expense 153,000 (206,000) (53,000) 248,000 Total other expenses (net) Income from continuing operations before income taxes 143,000 (206,000) (63,000) 394,000 118,200 275,800 74,400 173,600 Income tax expense Income from continuing operations Discontinued operations: Income (loss) from operations of discontinued component Income tax benefit (expense) (13,000) 3,900 (9,100) 164,500 116,000 (34,800) 81,200 357,000 Income (loss) on discontinued operations Net income $ Earnings per share: Income from continuing operations Discontinued operations Net income

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