Question

Income Statement, Lower Portion At the beginning of 2019, Cameron Company's retained earnings was $212,000. For...

Income Statement, Lower Portion

At the beginning of 2019, Cameron Company's retained earnings was $212,000. For 2019, Cameron has calculated its pretax income from continuing operations to be $120,000. During 2019, the following events also occurred:

  1. During July, Cameron sold Division M (a component of the company). It has determined that the pretax income from the operations of Division M during 2019 totals $39,000 and that a pretax loss of $40,500 was incurred on the sale of Division M.
  2. Cameron had 21,000 shares of common stock outstanding during all of 2019. It declared and paid a $1 per share cash dividend on this stock.

Required:

Assuming that all the pretax items are subject to a 30% income tax rate:

1. Complete the lower portion of Cameron's 2019 income statement, beginning with "Pretax Income from Continuing Operations." Round earnings per share computations to two decimal places.

CAMERON COMPANY
Partial Income Statement
For Year Ended December 31, 2019
Pretax income from continuing operations $
Income tax expense
_______?_________ $
Results from discontinued operations
_______?_________ $
Loss on sale of Division M (net of income tax credit)
_______?_________ $
Components of Income EPS
Income from continuing operations $
_______?_________
_______?_________ $

2. Prepare an accompanying retained earnings statement.

CAMERON COMPANY
Statement of Retained Earnings
For Year Ended December 31, 2019
Retained earnings, 1/1/2019 $
Add: Net income for 2019
$
Less: Cash dividends
Retained earnings, 12/31/2019 $
Business   Accounting   
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Answer #1

Required Statements are as prepared below:

CAMERON COMPANY
Partial Income Statement
For Year Ended December 31, 2019
Pretax income from continuing operations 120,000
Income tax expense
30% of pretax income 36000
Results from discontinued operations
39,000- (30% of 39,000) 27,300
Loss on sale of Division M (net of income tax credit) -28,350
Net Income 82,950
Components of Income EPS
Income from continuing operations
(120,000-36000)/21000 4
CAMERON COMPANY
Statement of Retained Earnings
For Year Ended December 31, 2019
Retained earnings, 1/1/2019 212,000
Add: Net income for 2019 82,950
$
Less: Cash dividends -21,000
Retained earnings, 12/31/2019 273,950
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