Selected information about income statement accounts for theRogers Company, Inc. is presented below (the company's fiscal yearends on December 31):
| | 2018 | | 2017 |
Sales | $ | 4,400,000 | $ | 3,500,000 |
Cost of goods sold | | 2,860,000 | | 2,000,000 |
Administrative expenses | | 800,000 | | 675,000 |
Selling expenses | | 360,000 | | 312,000 |
Interest revenue | | 150,000 | | 140,000 |
Interest expense | | 200,000 | | 200,000 |
Loss on sale of assets of discontinued component | | 50,000 | | — |
|
On July 1, 2018, the company adopted a plan to discontinue adivision that qualifies as a component of an entity as defined byGAAP. The assets of the component were sold on September 30, 2018,for $50,000 less than their book value. Results of operations forthe component (included in the above account balances)were as follows:
| 1/1/18-9/30/18 | | 2017 | |
Sales | | $ | 400,000 | | | | $ | 500,000 | |
Cost of goods sold | | | (290,000 | ) | | | | (320,000 | ) |
Administrative expenses | | | (50,000 | ) | | | | (40,000 | ) |
Selling expenses | | | (20,000 | ) | | | | (30,000 | ) |
Operating income before taxes | | $ | 40,000 | | | | $ | 110,000 | |
|
In addition to the account balances above, several events occurredduring 2018 that have not yet been reflected in the aboveaccounts:
- A fire caused $50,000 in uninsured damages to the main officebuilding. The fire was considered to be an infrequent but notunusual event.
- Inventory that had cost $40,000 had become obsolete because acompetitor introduced a better product. The inventory was sold asscrap for $5,000.
- Income taxes have not yet been recorded.
Required:
Prepare a multiple-step income statement for the Rogers Company for2018, showing 2017 information in comparative format, includingincome taxes computed at 40% and EPS disclosures assuming 300,000shares of common stock.
