Question

The following income statement items appeared on the adjusted trial balance of Tapia Nataly Corporation for the year ended December 31, 2024: sales revenue, $20,300; cost of goods sold, $4,500; selling expenses, $3,300; general and administrative expenses, $2,200; dividend revenue from investments, $2,000; interest expense, $700. Income taxes have not yet been accrued. The company's income tax rate is 25%. Further, the company's controller has asked for your help in determining the appropriate treatment of the following nonrecurring transactions that also occurred during 2024. All transactions are material in amount. 1. Investments were sold during the year at a loss of $800. 2. One of the company's factories was closed during the year. Restructuring costs incurred were $4,000. 3. During the year, Tapia completed the sale of one of its operating divisions that qualifies as a component of the entity according to GAAP regarding discontinued operations. The division had incurred operating income of $3,800 in 2024 prior to the sale, and its assets were sold at a loss of $1,800. REQUIRED: In the space below, prepare Tapia's multiple-step income statement, ignoring the continuous statement of comprehensive income for 2024, including earnings per share disclosures. Two thousand shares of common stock were outstanding throughout the year.

Answer 1

Tapia Nataly Corporation's income before taxes and nonrecurring items was $10,800. After accounting for a 25% tax rate, income from continuing operations was $8,100. Considering extraordinary items and net income for the year resulted in an EPS of $3.05.

Step-by-step explanation:

Tapia Nataly Corporation's Income Statement for the Year Ended December 31, 2024

Sales Revenue: $20,300

Less Cost of Goods Sold: $4,500

Gross Profit: $15,800

Operating Expenses:

Total Operating Expenses: $5,500

Income from Operations: $10,300

Other Income and (Expenses):

Total Other Income and (Expenses): $500

Income Before Income Tax and Extraordinary Items: $10,800

Income Tax Expense (25%): $2,700

Income Before Extraordinary Items: $8,100

Extraordinary Items:

• 
  
• Restructuring Costs: ($4,000)
• 
  
• Income from Discontinued Operations: $3,800
• 
  
• Loss on Sale of Discontinued Operations: ($1,800)

Total Extraordinary Items: ($2,000)

Net Income: $6,100

Earnings Per Share (EPS): $6,100 / 2,000 = $3.05